Final Exam Questions - ECON 528 Questions & Answers
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Course
ECON 528
Institution
ECON 528
False - ANSWERST or F: The law of diminishing marginal returns states that increases in the variable input reduce the total product.
False - ANSWERST or F: We should use relatively more labor if we learn that the marginal product per dollar of labor expenditures is less than a marginal product p...
Final Exam Questions - ECON 528
Questions & Answers
False - ANSWERST or F: The law of diminishing marginal returns states that increases
in the variable input reduce the total product.
False - ANSWERST or F: We should use relatively more labor if we learn that the
marginal product per dollar of labor expenditures is less than a marginal product per
dollar of capital expenditures.
True - ANSWERST or F: If a firm has increasing returns to scale, then increasing all
inputs by 1% will increase output by more than 1%.
Downward-Sloping - ANSWERSIf production displays economies of scale, the long-run
average cost curve is...
False - ANSWERST or F: Over time, more experienced workers will demand higher
wage and therefore, will lead to an increased in the cost of production for the producers.
Firms take market prices as given. - ANSWERSWhich of the following characteristics is
not common to monopolistic competition and perfect competition?
A. Firms take market prices as given.
B. Firms act to maximize profit.
C. The market demand curve is downward - sloping.
D. Entry barriers into the industry are low
Each member of a cartel has an incentive to "cheat" on the collusive agreement by
producing more than its share when everyone else sticks with the collusive agreement. -
ANSWERSCollusion makes firms better off because if they act as a single entity (a
cartel) they can reduce output and increase their prices and profits. But some cartels
have failed and others are unstable. Which of the following is a reason why cartels often
break down?
Cheat by producing a higher level of output. - ANSWERSCournot fashion agree to
produce the collusive output. Given that firm two commits to this collusive output, it pays
firm one to...
Anything greater than 40 percent. - ANSWERSThe value of the four-firm concentration
ratio that many economists consider indicative of the existence of an oligopoly in a
particular industry is...
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