Question 1

Average product will fall as long as

Accepted Answer

A) marginal product is falling. 
B) it exceeds marginal product. 
C) it is less than marginal product. 
D) the number of workers is increasing. 
A) marginal product is falling. 
B) it exceeds marginal product. 
C) it is less than marginal product. 
D) the number of workers is increasing.

Question 2

Given the production function q = 4L + K, what is formula for the marginal product of labor?

Accepted Answer

A) 4 
B) 4 + K 
C) 4K 
D) Cannot be determined with the information given. 
A) 4 
B) 4 + K 
C) 4K 
D) Cannot be determined with the information given.

Question 3

Suppose that additional units of capital affect the marginal productivity of labor. This is not unrealistic. Word processors increase the marginal productivity of secretaries. On the other hand, robotic equipment can completely replace a worker and, thereby, lower the marginal productivity of labor. Given this possibility, determine the conditions under which isoquants will not be convex (i.e., concave).

Accepted Answer

The slope of the isoquant equals -MP_L/MP_K.

Question 4

The actual time length of the short run is determined by when diminishing marginal returns start.

Accepted Answer

A) True 
 B)False

Question 5

With respect to production, the short run is best defined as a time period

Accepted Answer

A) lasting about six months. 
B) lasting about two years. 
C) in which all inputs are fixed. 
D) in which at least one input is fixed. 
A) lasting about six months. 
B) lasting about two years. 
C) in which all inputs are fixed. 
D) in which at least one input is fixed.

Question 6

Which of the following is an input to the production process?

Accepted Answer

A) a janitor's time 
B) a cement mixer 
C) Both A and B. 
D) None of the above. 
A) a janitor's time 
B) a cement mixer 
C) Both A and B. 
D) None of the above.

Question 7

The implementation of the assembly line is an example how

Accepted Answer

A) changes in the organization of production improve productivity. 
B) neutral technical change improves productivity. 
C) non-neutral technical change can decrease productivity. 
D) labor saving technical change increases economy-wide unemployment. 
A) changes in the organization of production improve productivity. 
B) neutral technical change improves productivity. 
C) non-neutral technical change can decrease productivity. 
D) labor saving technical change increases economy-wide unemployment.

Question 8

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

Accepted Answer

A) a beauty salon. 
B) a pizza parlor. 
C) a road construction firm. 
D) an airline. 
A) a beauty salon. 
B) a pizza parlor. 
C) a road construction firm. 
D) an airline.

Question 9

-The above figure shows the isoquants for producing steel. When producing between 10,000 and 20,000 tons, there are

Accepted Answer

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

Question 10

If production function q1 = f(L, K), which of the following production functions illustrates neutral technical progress?

Accepted Answer

A) q2 = f(1.25L, 1.25K) 
B) q2 = f(1.25L, K) 
C) q2 = f(L, 1.25K) 
D) q2 = 1.25 ∗ f(L, K) 
A) q2 = f(1.25L, 1.25K) 
B) q2 = f(1.25L, K) 
C) q2 = f(L, 1.25K) 
D) q2 = 1.25 ∗ f(L, K)

Question 11

Joey cuts lawns during the summer. Let q equal the number of acres mowed per day, and let L equal the number of hours worked per day. Joey never works more than eight hours per day, and during that time his short-run production function is q = 0.2 ∗ L. Which of the following statements is FALSE?

Accepted Answer

A) Joey's marginal product equals his average product. 
B) Joey's marginal product diminishes by 0.2 for each additional hour worked. 
C) Joey's average product is constant. 
D) Joey's marginal product is constant. 
A) Joey's marginal product equals his average product. 
B) Joey's marginal product diminishes by 0.2 for each additional hour worked. 
C) Joey's average product is constant. 
D) Joey's marginal product is constant.

Question 12

Over a five-year span, the ABC Co. reduced the amount of labor it hired. At the same time, the marginal productivity of labor increased. Which of the following COULD explain this observation?

Accepted Answer

A) the law of diminishing marginal returns 
B) labor saving technical change 
C) organizational innovation 
D) All of the above. 
A) the law of diminishing marginal returns 
B) labor saving technical change 
C) organizational innovation 
D) All of the above.

Question 13

Isoquants

Accepted Answer

A) hold utility constant. 
B) hold capital constant. 
C) hold labor constant. 
D) hold output constant. 
A) hold utility constant. 
B) hold capital constant. 
C) hold labor constant. 
D) hold output constant.

Question 14

If a firm triples inputs and produces three times the output, then there are

Accepted Answer

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

Question 15

The length of the short run is the same for all firms.

Accepted Answer

A) True 
 B)False

Question 16

-The above table shows the short-run production function for Albert's Pretzels. The average product of labor

Accepted Answer

A) increases first and then decreases. 
B) decreases first and then increases. 
C) decreases throughout. 
D) increases throughout. 
A) increases first and then decreases. 
B) decreases first and then increases. 
C) decreases throughout. 
D) increases throughout.

Question 17

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

Accepted Answer

A) The production function has decreasing returns to scale. 
B) The marginal productivity of labor falls as labor increases in the short run. 
C) Capital and labor can be substituted for one another. 
D) All of the above. 
A) The production function has decreasing returns to scale. 
B) The marginal productivity of labor falls as labor increases in the short run. 
C) Capital and labor can be substituted for one another. 
D) All of the above.

Question 18

Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. The firm currently produces q1 units. If all inputs doubled, the new level of output will equal

Accepted Answer

A) 20.4 ∗ q1. 
B) 20.8 ∗ q1. 
C) 0.8 ∗ q1. 
D) 1.6 ∗ q1. 
A) 20.4 ∗ q1. 
B) 20.8 ∗ q1. 
C) 0.8 ∗ q1. 
D) 1.6 ∗ q1.

Question 19

Which of the following statements is TRUE in the short run?

Accepted Answer

A) Generally, labor is a variable input. 
B) Generally, capital is a variable input. 
C) Raw materials are generally considered to be fixed inputs. 
D) Whether or not an input is considered fixed is dependent on the price paid for the input. 
A) Generally, labor is a variable input. 
B) Generally, capital is a variable input. 
C) Raw materials are generally considered to be fixed inputs. 
D) Whether or not an input is considered fixed is dependent on the price paid for the input.

Question 20

Returns to scale refers to the change in output when

Accepted Answer

A) all inputs increase proportionately. 
B) labor increases holding all other inputs fixed. 
C) capital equipment is doubled. 
D) specialization improves. 
A) all inputs increase proportionately. 
B) labor increases holding all other inputs fixed. 
C) capital equipment is doubled. 
D) specialization improves.

Average product will fall as long as

Given the production function q = 4L + K, what is formula for the marginal product of labor?

The actual time length of the short run is determined by when diminishing marginal returns start.

With respect to production, the short run is best defined as a time period

Which of the following is an input to the production process?

The implementation of the assembly line is an example how

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

-The above figure shows the isoquants for producing steel. When producing between 10,000 and 20,000 tons, there are

If production function q1 = f(L, K), which of the following production functions illustrates neutral technical progress?

Joey cuts lawns during the summer. Let q equal the number of acres mowed per day, and let L equal the number of hours worked per day. Joey never works more than eight hours per day, and during that time his short-run production function is q = 0.2 ∗ L. Which of the following statements is FALSE?

Over a five-year span, the ABC Co. reduced the amount of labor it hired. At the same time, the marginal productivity of labor increased. Which of the following COULD explain this observation?

Isoquants

If a firm triples inputs and produces three times the output, then there are

The length of the short run is the same for all firms.

-The above table shows the short-run production function for Albert's Pretzels. The average product of labor

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 (are)TRUE?

Suppose the production of DVD players can be represented by the following production function: q = L^0.4K^0.4. The firm currently produces q1 units. If all inputs doubled, the new level of output will equal

Which of the following statements is TRUE in the short run?

Returns to scale refers to the change in output when

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

Average product will fall as long as

Given the production function q = 4L + K, what is formula for the marginal product of labor?

The actual time length of the short run is determined by when diminishing marginal returns start.

With respect to production, the short run is best defined as a time period

Which of the following is an input to the production process?

The implementation of the assembly line is an example how

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

-The above figure shows the isoquants for producing steel. When producing between 10,000 and 20,000 tons, there are

If production function q1 = f(L, K), which of the following production functions illustrates neutral technical progress?

Joey cuts lawns during the summer. Let q equal the number of acres mowed per day, and let L equal the number of hours worked per day. Joey never works more than eight hours per day, and during that time his short-run production function is q = 0.2 ∗ L. Which of the following statements is FALSE?

Over a five-year span, the ABC Co. reduced the amount of labor it hired. At the same time, the marginal productivity of labor increased. Which of the following COULD explain this observation?

Isoquants

If a firm triples inputs and produces three times the output, then there are

The length of the short run is the same for all firms.

-The above table shows the short-run production function for Albert's Pretzels. The average product of labor

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

Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. The firm currently produces q1 units. If all inputs doubled, the new level of output will equal

Which of the following statements is TRUE in the short run?

Returns to scale refers to the change in output when

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

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 (are)TRUE?

Suppose the production of DVD players can be represented by the following production function: q = L^0.4K^0.4. The firm currently produces q1 units. If all inputs doubled, the new level of output will equal