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A merger of two firms may increase economic efficiency by {Ans: decreasing average total cost through an increase in economies of scale}Which of the following is not a characteristic of monopolistically competitive markets? {Ans: Long run economic profits}Which of the following will cause an unregulated monopolist to produce a more allocatively efficient level of output? {Ans: A subsidy that increase as output increases}The profit maximizing output level produced by an unregulated monopoly is: {Ans: Less than the socially optimal level, since the price paid by consumers exceeds the firm's marginal cost.}In the short run, a perfectly competitive firm should shut down whenever: {Ans: Minimum average variable cost exceeds price}Which of the following is true regarding price discrimination? {Ans: profits are increased at the expense of consumer surplus}If each firm simultaneously chooses its pricing without collusion, Firm A's and Firm B's profits would be which of the following? {Ans: 50;50}Which of the following is true if a monopolist's marginal revenue is negative at the current level of output? {Ans: demand is price inelastic}If the price of a firm's variable input increases, which of the following will occur? {Ans: The firm will decrease