Econ208-Section003, Fall 2007: Final Examination
If firms in a competitive industry are earning positive economic profits, in the long run we expect
A) there would be no change in the industry as long as P=MC for the individual firms.
B) the government would intervene and force the firms to lower prices.
C) the demand curve for the product will shift to the left, so that the price of the product will fall.
D) the individual firms will lower their price to discourage new firms from entering the industry.
E) the supply curve for the product will shift to the right as new firms enter the industry, causing industry output to increase and price to fall.
One of the reasons cartels are considered unstable is that
A) individual members of the cartel have an incentive to violate the cartel agreement.
B) consumers seek out substitutes to the cartel product.
C) it is inefficient to manage individual firms collectively.
D) there are wide fluctuations in price as cartel members vary their output.
E) member firms reduce their investment, thereby becoming uncompetitive over time.
When a firm's total-product curve is increasing at a decreasing rate
A) marginal product is positive but declining.
B) average product is zero.
C) the marginal-product curve lies below the average-product curve.
D) average product is falling.
E) marginal product is negative and decreasing.
Econ208-Section003,Fall 2007: Final Examination
A) there would be no change in the industry as long as P=MC for the individual firms. B) the government would intervene and force the firms to lower prices. D) the individual firms will lower their price to discourage new firms from entering the industry. E) the supply curve for the product will shift to the right as new firms enter the industry, causing industry output to increase and price to fall. 99) One of the reasons cartels are considered unstable is that A) individual members of the cartel have an incentive to violate the cartel agreement. B) consumers seek out substitutes to the cartel product. C) it is inefficient to manage individual firms collectively D) there are wide fluctuations in price as cartel members vary their output. E) member firms reduce their investment, thereby becoming uncompetitive over time. 100 When a firm's total-product curve is increasing at a decreasing rate A) marginal product is positive but declining. C) the marginal-product curve lies below the average-product curve. B) average product is zero. D) average product is falling. E) marginal product is negative and decreasing.