1. In 2011, the box industry was perfectly competitive. The lowest point on the long-run average cost curve of each of the identical box producers is $4, and this minimum point occurs at an output of 1,000 boxes per month. The market demand curve for boxes is

Q^D = 140,000 - 10,000 P,

where P is the price of a box (in dollars per box), and Q^D is the quantity of boxes demanded per month. The market supply curve for boxes is

Q^S = 80,000 + 5,000 P,

where Q^S is the quantity of boxes supplied per month. The equilibrium quantity of boxes in the market is  ...and the number of firms in this industry when it is in long-run equilibrium is .....

A. 100,000 units and 1,000 firms.

B. 200,000 units and 200 firms.

C. 100,000 units and 100 firms.

D. 200,000 units and 100 firms.

E. none of the above.

2. A chemical company can produce Q units of a chemical H, with marginal costs of MC = 9 + Q, and can distribute the chemical at marketing marginal costs of MC = 1. The demand for H is given by P = 30 - 1.5Q. If an external market exists where H can be bought or sold without marketing expenses for $13, how much H should the firm produce?"

A. 0 units

B. 4 units

C. 5 units

D. 7 units

E. 10 units

3. Gliberace's Fashion Accessories of Las Vegas produces gem-stone encrusted formal wear for sale in Los Angeles and San Francisco subject to total cost

TC = 100 + 5(Q_LA + Q_SF). Demand for Gliberace's stones in the two cities is given by Q_LA = 70 - 2P_LA and Q_SF = 55 - P_SF. If Gliberace price discriminates between the two cities, what will its maximum profits be?

A. $750

B. $825

C. $1,075

D. $975

E. $1,175

4. A firm has a division which produces chemical Y, whose average total costs are ATC = 50 + 2Q (where Q is the quantity of Y), and a marketing division which adds its own average total costs of ATC = 20 + 3Q. There is no external market price of Y. The transfer price of Y should be

A. $50.

B. $4Q.

C. $50 + 4Q.

D. $2Q.

E. $5Q.