Can anyone help with my microeconomics questions?

Posted on 2014-12-04 07:59:00 in Economics by DEDO

Someone please help me figure this out, I'd be really thankful.

1. A gas station operates in a monopolistically competitive market and is in short-run equilibrium. Suppose that a fixed cost for this firm decreases. As a result, the firm's price will ________, the firm's output will ________, and the firm's economic profit will ________.

a) increase; increase; increase
b) stay the same; stay the same; increase
c) decrease; stay the same; increase
d) increase; increase; decrease

2. General Snacks is a typical firm in a market characterized by the model of monopolistic competition. Initially, the market is initially in long-run equilibrium, and then there is an increase in demand for snacks. We expect that:

a) there will be a short-run increase in the number of firms, but in the long run the number of firms will return to the original level.
b) in the long run, new firms will enter the market.
c) firms will shut down, but they will not leave the industry in the long run.
d) firms will leave the market in the long run.

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