Question 1

Cobb-Douglas production functions can never possess varying returns to scale.

Accepted Answer

A) True 
 B)False

Question 2

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

Accepted Answer

A) 100-200 units 
B) 200-400 units 
C) 400-600 units 
D) There is insufficient information to answer the question. 
A) 100-200 units 
B) 200-400 units 
C) 400-600 units 
D) There is insufficient information to answer the question.

Question 3

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

Accepted Answer

A) capital and labor are perfect substitutes. 
B) capital and labor must be used together in a fixed proportion. 
C) capital is not productive. 
D) labor is not productive. 
A) capital and labor are perfect substitutes. 
B) capital and labor must be used together in a fixed proportion. 
C) capital is not productive. 
D) labor is not productive.

Question 4

Isoquants that are downward-sloping straight lines imply that the inputs

Accepted Answer

A) are perfect substitutes. 
B) are imperfect substitutes. 
C) cannot be used together. 
D) must be used together in varying proportions. 
A) are perfect substitutes. 
B) are imperfect substitutes. 
C) cannot be used together. 
D) must be used together in varying proportions.

Question 5

A firm engaging in efficient production, using current technology, ________ produce its current level of production with ________ inputs.

Accepted Answer

A) could; fewer 
B) cannot; fewer 
C) cannot, more 
D) cannot; different 
A) could; fewer 
B) cannot; fewer 
C) cannot, more 
D) cannot; different

Question 6

Labor saving nonneutral technical progress allows a firm to

Accepted Answer

A) produce more output with the same inputs. 
B) use less labor and the same amount of other inputs to produce the same level of output. 
C) use more labor to produce the same level of output. 
D) use less labor and more of other inputs to produce the same level of output. 
A) produce more output with the same inputs. 
B) use less labor and the same amount of other inputs to produce the same level of output. 
C) use more labor to produce the same level of output. 
D) use less labor and more of other inputs to produce the same level of output.

Question 7

Which of the following statements best summarizes the law of diminishing marginal returns?

Accepted Answer

A) In the short run, as more labor is hired, output diminishes. 
B) In the short run, as more labor is hired, output increases at a diminishing rate. 
C) In the short run, the amount of labor a firm will hire diminishes as output increases. 
D) As more labor is hired, the length of time that defines the short run diminishes. 
A) In the short run, as more labor is hired, output diminishes. 
B) In the short run, as more labor is hired, output increases at a diminishing rate. 
C) In the short run, the amount of labor a firm will hire diminishes as output increases. 
D) As more labor is hired, the length of time that defines the short run diminishes.

Question 8

Which of the following is least likely to be considered an input to production?

Accepted Answer

A) a supervisor's time 
B) an integrated circuit fabrication plant 
C) wind 
D) None of the above. 
A) a supervisor's time 
B) an integrated circuit fabrication plant 
C) wind 
D) None of the above.

Question 9

Which of the following is NOT a property of isoquants?

Accepted Answer

A) They do not cross. 
B) The closer they are to the origin, the higher the level of output. 
C) They have a downward slope. 
D) They are "thin." 
A) They do not cross. 
B) The closer they are to the origin, the higher the level of output. 
C) They have a downward slope. 
D) They are "thin."

Question 10

Explain why labor might not always be a variable input.

Accepted Answer

In the real world, units of labor are no

Question 11

Neutral technical progress allows a firm to

Accepted Answer

A) produce more output with the same inputs. 
B) use less capital to produce more output. 
C) use less labor to produce more output. 
D) produce the same amount of output with the same inputs. 
A) produce more output with the same inputs. 
B) use less capital to produce more output. 
C) use less labor to produce more output. 
D) produce the same amount of output with the same inputs.

Question 12

A firm that engages in efficient production

Accepted Answer

A) cannot produce the same output with fewer inputs. 
B) could produce the same output with fewer inputs if it wanted to. 
C) is not interested in profit maximization. 
D) uses old technology to minimize costs. 
A) cannot produce the same output with fewer inputs. 
B) could produce the same output with fewer inputs if it wanted to. 
C) is not interested in profit maximization. 
D) uses old technology to minimize costs.

Question 13

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Accepted Answer

The production function below illustrate

Question 14

Decreasing returns to scale may occur because increasing the amount of inputs used

Accepted Answer

A) increases specialization. 
B) always increases the amount of output produced. 
C) may cause coordination difficulties. 
D) increases efficiency. 
A) increases specialization. 
B) always increases the amount of output produced. 
C) may cause coordination difficulties. 
D) increases efficiency.

Question 15

-At Joey's Lawncutting Service, a lawn mower cannot cut grass without a laborer. A laborer cannot cut grass without a lawn mower. Which graph in the above figure best represents the isoquants for Joey's Lawncutting Service when 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 16

Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. Which of the following statements is TRUE?

Accepted Answer

A) The production function has decreasing returns to scale. 
B) The production function has increasing returns to scale. 
C) The production function has constant returns to scale. 
D) Returns to scale vary with the level of output. 
A) The production function has decreasing returns to scale. 
B) The production function has increasing returns to scale. 
C) The production function has constant returns to scale. 
D) Returns to scale vary with the level of output.

Question 17

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons, there are

Accepted Answer

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

Question 18

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Accepted Answer

In the short run, MPL = 0.25 ∗

Question 19

Let the production function be q = ALaKb. The function exhibits constant returns to scale if

Accepted Answer

A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given. A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given.

Question 20

-The table in the above figure shows the levels of output resulting from different levels of inputs. At which level of input are there constant returns to scale?

Accepted Answer

A) 400-600 units 
B) Constant returns to scale exist throughout all levels of production. 
C) Constant returns to scale do not exist at any level of production. 
D) No firm conclusions can be drawn. 
A) 400-600 units 
B) Constant returns to scale exist throughout all levels of production. 
C) Constant returns to scale do not exist at any level of production. 
D) No firm conclusions can be drawn.

Cobb-Douglas production functions can never possess varying returns to scale.

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

Isoquants that are downward-sloping straight lines imply that the inputs

A firm engaging in efficient production, using current technology, produce its current level of production with inputs.

Labor saving nonneutral technical progress allows a firm to

Which of the following statements best summarizes the law of diminishing marginal returns?

Which of the following is least likely to be considered an input to production?

Which of the following is NOT a property of isoquants?

Explain why labor might not always be a variable input.

Neutral technical progress allows a firm to

A firm that engages in efficient production

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Decreasing returns to scale may occur because increasing the amount of inputs used

Suppose the production of DVD players can be represented by the following production function: q = L^0.4K^0.4. Which of the following statements is TRUE?

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons, there are

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. Show that the marginal productivity of labor diminishes in the short run.

Let the production function be q = AL^aK^b. The function exhibits constant returns to scale if

-The table in the above figure shows the levels of output resulting from different levels of inputs. At which level of input are there constant returns to scale?

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

Cobb-Douglas production functions can never possess varying returns to scale.

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

Isoquants that are downward-sloping straight lines imply that the inputs

A firm engaging in efficient production, using current technology, ________ produce its current level of production with ________ inputs.

Labor saving nonneutral technical progress allows a firm to

Which of the following statements best summarizes the law of diminishing marginal returns?

Which of the following is least likely to be considered an input to production?

Which of the following is NOT a property of isoquants?

Explain why labor might not always be a variable input.

Neutral technical progress allows a firm to

A firm that engages in efficient production

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Decreasing returns to scale may occur because increasing the amount of inputs used

Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. Which of the following statements is TRUE?

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons, there are

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Let the production function be q = ALaKb. The function exhibits constant returns to scale if

-The table in the above figure shows the levels of output resulting from different levels of inputs. At which level of input are there constant returns to scale?

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

A firm engaging in efficient production, using current technology, produce its current level of production with inputs.

Suppose the production of DVD players can be represented by the following production function: q = L^0.4K^0.4. Which of the following statements is TRUE?

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. Show that the marginal productivity of labor diminishes in the short run.

Let the production function be q = AL^aK^b. The function exhibits constant returns to scale if