1.In the model of monopolistic competition, there can be short-run

a. losses or profits but there must be profits in long-run equilibrium.
b. profits but there must be losses in long-run equilibrium.
c. losses or profits but there must be losses in long-run equilibrium.
d. losses or profits but there must be neither profits nor losses in long-run equilibrium.
e. losses but there must be profits in long-run equilibrium.

2.If the perfectly competitive market demand for gym shoes is given by QD = 100 - P and the market supply is given by QS = 10 + 2P, then the equilibrium price and quantity will be

a. P = 50 and Q = 50.
b. P = 40 and Q = 90.
c. P = 40 and Q = 60.
d. P = 30 and Q = 70.
e. P = 25 and Q = 75.

3.Total surplus in a market is a measure of

a. social welfare created by the market.
b. profits that accrue to the owners of firms in a particular market.
c. the rebates that consumers receive when they purchase certain goods or services.
d. excess inventory that remains at the end of a season.
e. planned inventory that a firm carries from one year to the next.

4.A representative firm with long-run total cost given by TC = 2,000 + 20q + 5q2 operates in a competitive industry where the market demand is given by QD = 10,000 - 40P. The long-run equilibrium industry output will be

a. 1,200 units.
b. 1,800 units.
c. 2,200 units.
d. 2,600 units.
e. 3,200 units.