Question 1

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

Accepted Answer

Diminishing returns to labor means that

Question 2

If capital is fixed, but a firm varies labor

Accepted Answer

A) the firm stays on the same isoquant. 
B) the firm moves to a new isoquant. 
C) the firm might move to a new isoquant, depending on how much labor is added. 
D) the firm's output will be dependent on the marginal rate of technical substitution. 
A) the firm stays on the same isoquant. 
B) the firm moves to a new isoquant. 
C) the firm might move to a new isoquant, depending on how much labor is added. 
D) the firm's output will be dependent on the marginal rate of technical substitution.

Question 3

Joey cuts grass during the summer. He rents a lawn mower from his dad. Which of the following statements best illustrates the difference between the short run and the long run for Joey?

Accepted Answer

A) Joey's friends say they will help him, but when he calls them, they say they have other things to do. 
B) When Joey acquires more customers, he responds by working more hours. Next year, he will buy a lawn mower and split the work with his brother. 
C) Some customers pay Joey immediately; others wait till the following week. 
D) Joey has had to turn away some customers because he is already too busy. 
A) Joey's friends say they will help him, but when he calls them, they say they have other things to do. 
B) When Joey acquires more customers, he responds by working more hours. Next year, he will buy a lawn mower and split the work with his brother. 
C) Some customers pay Joey immediately; others wait till the following week. 
D) Joey has had to turn away some customers because he is already too busy.

Question 4

Which of the following is an output of production?

Accepted Answer

A) a haircut 
B) a U.S. savings bond 
C) a share of Acme Corporation stock 
D) None of the above. 
A) a haircut 
B) a U.S. savings bond 
C) a share of Acme Corporation stock 
D) None of the above.

Question 5

-The table in the above figure shows the levels of output resulting from different levels of inputs. Which of the following conclusions can be drawn from this information?

Accepted Answer

A) Increasing returns to scale exist between 100 and 200 units of output. 
B) Constant returns to scale exist throughout all levels of production. 
C) Labor is subject to diminishing marginal productivity in the short run. 
D) No firm conclusions can be drawn. 
A) Increasing returns to scale exist between 100 and 200 units of output. 
B) Constant returns to scale exist throughout all levels of production. 
C) Labor is subject to diminishing marginal productivity in the short run. 
D) No firm conclusions can be drawn.

Question 6

Which of the following is least likely to be considered a capital input?

Accepted Answer

A) a sewing machine 
B) a tractor 
C) a telephone 
D) a ten dollar bill 
A) a sewing machine 
B) a tractor 
C) a telephone 
D) a ten dollar bill

Question 7

-Which graph in the above figure represents the isoquants where, as the amount of labor used increases and the amount of capital used decreases, the marginal product of labor rises (units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis)?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D 
A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D

Question 8

Which of the following inputs is normally considered to be variable in the short run?

Accepted Answer

A) labor 
B) capital 
C) money 
D) time 
A) labor 
B) capital 
C) money 
D) time

Question 9

-According to the table above, transportation equipment production exhibits

Accepted Answer

A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) varying returns to scale. 
A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) varying returns to scale.

Question 10

The steeper an isoquant is

Accepted Answer

A) the greater is the marginal product of labor relative to that of the marginal product of capital. 
B) the greater is the substitutability between capital and labor. 
C) the greater is the need to keep capital and labor in fixed proportions. 
D) the greater is the level of output. 
A) the greater is the marginal product of labor relative to that of the marginal product of capital. 
B) the greater is the substitutability between capital and labor. 
C) the greater is the need to keep capital and labor in fixed proportions. 
D) the greater is the level of output.

Question 11

Changing how production is organized cannot result in changes in productivity.

Accepted Answer

A) True 
 B)False

Question 12

Total Product is

Accepted Answer

A) the change in total product resulting from an extra unit of labor, holding other factors constant. 
B) the ratio of output to the number of workers used to produce that output. 
C) the amount of output that can be produced by a given amount of labor. 
D) equal to the marginal product of labor when the average product is increasing. 
A) the change in total product resulting from an extra unit of labor, holding other factors constant. 
B) the ratio of output to the number of workers used to produce that output. 
C) the amount of output that can be produced by a given amount of labor. 
D) equal to the marginal product of labor when the average product is increasing.

Question 13

Which of the following is likely to have the shortest long run?

Accepted Answer

A) a nail salon 
B) a construction firm 
C) an electric company 
D) a container ship operations company 
A) a nail salon 
B) a construction firm 
C) an electric company 
D) a container ship operations company

Question 14

Technical and organizational change

Accepted Answer

A) typically reduces prices by increasing the supply of the product, ceteris paribus. 
B) typically reduces prices by decreasing the demand for the product, ceteris paribus. 
C) typically increases prices by increasing the demand for the product, ceteris paribus. 
D) typically increases prices by decreasing the supply for the product, ceteris paribus. 
A) typically reduces prices by increasing the supply of the product, ceteris paribus. 
B) typically reduces prices by decreasing the demand for the product, ceteris paribus. 
C) typically increases prices by increasing the demand for the product, ceteris paribus. 
D) typically increases prices by decreasing the supply for the product, ceteris paribus.

Question 15

Returns to specialization can occur when

Accepted Answer

A) increasing the amount of labor allows workers to specialize. 
B) the exponents of the Cobb-Douglas production function are greater than 1. 
C) a firm doubles its inputs. 
D) the average cost curve is above the marginal costs curve. 
A) increasing the amount of labor allows workers to specialize. 
B) the exponents of the Cobb-Douglas production function are greater than 1. 
C) a firm doubles its inputs. 
D) the average cost curve is above the marginal costs curve.

Question 16

-According to the table above, paper product production exhibits

Accepted Answer

A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) varying returns to scale. 
A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) varying returns to scale.

Question 17

Which of the following inputs is normally considered to be variable in the short run?

Accepted Answer

A) labor 
B) raw materials 
C) capital 
D) Both A and B 
A) labor 
B) raw materials 
C) capital 
D) Both A and B

Question 18

If the marginal product of labor is constant for all levels of output, then the average product of labor

Accepted Answer

A) is constant. 
B) equals the marginal product of labor. 
C) Both A and B above. 
D) Either A or B above but not both. 
A) is constant. 
B) equals the marginal product of labor. 
C) Both A and B above. 
D) Either A or B above but not both.

Question 19

-The above table shows the short-run production function for Albert's Pretzels. The law of diminishing marginal product

Accepted Answer

A) appears with the second worker. 
B) has not yet appeared for any of the levels of labor. 
C) first appears with the fifth worker. 
D) is refuted by this evidence. 
A) appears with the second worker. 
B) has not yet appeared for any of the levels of labor. 
C) first appears with the fifth worker. 
D) is refuted by this evidence.

Question 20

Given the production function q = 4L + K, what is the marginal product of labor when capital is fixed at 50?

Accepted Answer

A) 54 
B) 4 
C) 50 
D) 250 
A) 54 
B) 4 
C) 50 
D) 250

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

If capital is fixed, but a firm varies labor

Joey cuts grass during the summer. He rents a lawn mower from his dad. Which of the following statements best illustrates the difference between the short run and the long run for Joey?

Which of the following is an output of production?

-The table in the above figure shows the levels of output resulting from different levels of inputs. Which of the following conclusions can be drawn from this information?

Which of the following is least likely to be considered a capital input?

-Which graph in the above figure represents the isoquants where, as the amount of labor used increases and the amount of capital used decreases, the marginal product of labor rises (units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis)?

Which of the following inputs is normally considered to be variable in the short run?

-According to the table above, transportation equipment production exhibits

The steeper an isoquant is

Changing how production is organized cannot result in changes in productivity.

Total Product is

Which of the following is likely to have the shortest long run?

Technical and organizational change

Returns to specialization can occur when

-According to the table above, paper product production exhibits

Which of the following inputs is normally considered to be variable in the short run?

If the marginal product of labor is constant for all levels of output, then the average product of labor

-The above table shows the short-run production function for Albert's Pretzels. The law of diminishing marginal product

Given the production function q = 4L + K, what is the marginal product of labor when capital is fixed at 50?

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 5: Production

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

If capital is fixed, but a firm varies labor

Joey cuts grass during the summer. He rents a lawn mower from his dad. Which of the following statements best illustrates the difference between the short run and the long run for Joey?

Which of the following is an output of production?

-The table in the above figure shows the levels of output resulting from different levels of inputs. Which of the following conclusions can be drawn from this information?

Which of the following is least likely to be considered a capital input?

-Which graph in the above figure represents the isoquants where, as the amount of labor used increases and the amount of capital used decreases, the marginal product of labor rises (units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis)?

Which of the following inputs is normally considered to be variable in the short run?

-According to the table above, transportation equipment production exhibits

The steeper an isoquant is

Changing how production is organized cannot result in changes in productivity.

Total Product is

Which of the following is likely to have the shortest long run?

Technical and organizational change

Returns to specialization can occur when

-According to the table above, paper product production exhibits

Which of the following inputs is normally considered to be variable in the short run?

If the marginal product of labor is constant for all levels of output, then the average product of labor

-The above table shows the short-run production function for Albert's Pretzels. The law of diminishing marginal product

Given the production function q = 4L + K, what is the marginal product of labor when capital is fixed at 50?

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters