Suppose the market price in a perfectly competitive industry is $25. You estimate that at the current level of production some firms have an average...

1.Suppose the market price in a perfectly competitive industry is $25. You estimatethat at the current level of production some firms have an average total cost of $20.What will happen to the number of firms in the market and total market output?A) The number of firms will fall and market output will fall.B) The number of firms will fall and market output will rise.C) The number of firms will rise and market output will fall.D) The number of firms will rise and market output will rise2. In an increasing cost industry, a rise in demand has which of the following effects onthe equilibrium price in the short run and the long run?A) Short run; Higher, Long run; HigherB) Short run; Higher, Long run; No effectC) Short run; No effect, Long run; HigherD) Short run; No effect, Long run; No effect3.Suppose a cost of a variable input increases. In the short run this will cause theaverage variable cost curve and the marginal cost curve to:A) shift down at every level of output.B) shift up at every level of output.C) be unaffected in the short run.D) shift up leading to an increase in price and the entry of new firms into theindustry.4. The firm's short-run shutdown price is the ________ point of the ________ curve.A) minimum; average-total-costB) minimum; marginal costC) minimum; average-variable-costD) maximum; total revenue5. Under natural monopoly, the market-clearing price occurs at a point where:A) MC = AC.B) MC < AC.C) MR = AR.D) AR < MC.

1.Suppose the market price in a perfectly competitive industry is $25. You estimatethat at the current level of production some firms have an average total cost of $20.What will happen to the...