A. Since price is above marginal cost surplus is redistributed from buyers to sellers
B. monopolistically competitive firms earn economic profits in the long run
C. monopolistically competitive firms produce beyond their efficient scale
D. excess of the cost of production and this causes a deadweight loss.

A. a manual fracture of breakfast cereal
B. a wholesaler of crude oil
C. a restaurant
D. a manufacturer of home heating and air conditioning

A. losses and firms exit the market
B. profits and firms exit the market
C. losses and firms enter the market
D. profits and firms enter the market

A. breakfast
B. cotton
C. video games
D. beer

A. Advertising increases competition
B. Advertising provides information to customers about prices, new products and location of retail outlets.
C. Advertising provides a creative outlet for artists and writers
D. Advertising provides new firms with the means to attract customers from existing firms.

A. all of these answers
B. are useful even in socialist economics such as the former Soviet Union
C. provide information about the quality of the product
give firms incentive to maintain high quality

A. monopolistically competitive firms charge prices equal to their marginal costs just like monopolists
B. a monopolistically competitive firms faces a downward-slog demand curve for its differentiated product and so does a monopolist
C. monopolistically competitive markets have free entry and exit just like a monopolistic market
D. monopolistically competitive firms produce beyond their efficient scale and so do monopolists

A. there are too many firms in the market and market efficiency could be increased if firms exited the market
B. the number of firms in the market is optimal and the market is efficient
C. There are too few firms in the market and market efficiency could be be increased with additional entry
D. The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.

A. at the efficient scale and charge a price equal to marginal cost
B. at the efficient scale and charge a price above marginal cost
C. With excess capacity and charge a price above marginal cost
D. With excess capacity and charge a price equal to marginal cost