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1.Consider the market for pencil erasers, which is perfectly competitive andcharacterized by the following cost structure: MC=4q+4    and  VC=2q^2+ 4q Allwe know about fixed costs is that they are greater than zero. The currentmarket price is $16. Which of the following statements is true?

a.The firm would prefer to shut down than produce at any positive quantity.

b.If fixed costs are sufficiently high, this firm will shut down in the shortrun.

c.The firm will make positive profits in the short run if fixed costs are lessthan $18.

d.Given this information, we can calculate the long-run market price of pencilerasers.

e.None of the above.

2. Using the information from the previous question, if the fixed cost ofproduction is $128 then the long run price will be:

a.$8

b.$16

c.$36

d.None of the above.
请详细点，但不要用太复杂的术语 谢谢！

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关键词：information competitive Informatio Statements production statements following structure positive quantity

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