If the wage rate increases and firms in a perfectly competitive industry are hiring labor, then
A. the firms will quit using labor.
B. market supply will decrease.
C. profits will increase.
D. market price will decrease.
Answer: B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
Advertising by monopolistically competitive firms can do all of the following EXCEPT
A. lower the consumer's purchase price. B. help differentiate a firm's product. C. result in increased profits for the advertising firm. D. act as a signal to consumers that the company is serious about staying in business.