Please help me with these mcq questions.. Q5 to Q9 Question 5 When a competitive

Question

Please help me with these mcq questions.. Q5 to Q9

Question 5 When a competitive firm is monopolized (a) part of the consumer's surplus is transferred to the monopolist in the form of an economic profit. (b) producer's surplus is maximized. (c) there is a deadweight loss to society. (d) Both (a) and (b). (e) Both (a) and (c). Question 6 In the short run, the competitive firm should reduce its output to zero and shut down if: (a) price falls below average variable cost. (b) the demand curve faced by the firm becomes horizontal. (c) price falls below the average total cost of production. (d) the firm earns no positive economic profit.

Explanation / Answer

1- WHENEVER A COMPETITIVE FIRM IS MONOPOLIZED THIS MEANS THAT A PART OF THE CONSUMER SURPLUS IS PASSED ON TO PRODUCER IN FORM OF PROFITS, AND SOME PART OF CONSUMER AND PRODUCER SURPLUS IS LOST IN FORM OF DEADWEIGHT LOSS

SO ANSWRR IS BOTH a AND c

2- IN SHORT RUN A COMPETITIVE FIRM SHOULD SHUT DOWN WHEN IT IS NOT ABLE TO GET EVEN ITS VARIABLE COST, BECAUSE IN LONG RUN WE CAN COVER FIXED COST WHEN BOTH THE INPUTS WIL GET VARIABLE BUT IF IN SHORT RUN THE PRICES ARE LESS THAN THE LOWEST OF THE AVERAGE VARIABLE COST WE SHOULD SHUT DOWN.

SO ANSWER HERE IS A

3- IN SHORT RUN THE SUPPLY CIURVE IS GIVEN BY P = SMC where P > loweest point of savc

so answer is C

4- the profit max quantity is where

P = MC

4Q+10 = 54 so Q = 11

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