QUESTION 17
The market price in a given industry is $30. The industry is characterized by perfect competition. If a firm has a marginal cost curve
given by MC = 2 + \frac{1}{2}Q, at what quantity does the firm maximize profit?
88
92
80
84
QUESTION 18
Which of the below will NOT occur if existing firms are earning positive economic profits in a competitive market?
The market price will rise.
New firms will enter.
Entry will stop once firms' economic profits have been driven to zero.
The short run market supply curve shifts to the right.