Question 1

Isoquants usually slope downward (from left to right)because:

Accepted Answer

A)  marginal products are usually positive. 
B)  marginal products are always positive. 
C)  marginal products will eventually decrease. 
D)  marginal products are always increasing. 
E)  average products are usually less than marginal products. 
A)  marginal products are usually positive. 
B)  marginal products are always positive. 
C)  marginal products will eventually decrease. 
D)  marginal products are always increasing. 
E)  average products are usually less than marginal products.

Question 2

Increasing returns to scale:

Accepted Answer

A)  occur only where marginal returns are increasing. 
B)  cannot occur if all inputs have diminishing returns. 
C)  imply imperfect capital market returns. 
D)  result from just-in-time production. 
E)  are consistent with diminishing marginal returns by all inputs. 
A)  occur only where marginal returns are increasing. 
B)  cannot occur if all inputs have diminishing returns. 
C)  imply imperfect capital market returns. 
D)  result from just-in-time production. 
E)  are consistent with diminishing marginal returns by all inputs.

Question 3

Output is produced according to Q = 4L + 6K,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $12 and the price of L is $6,then the cost-minimizing combination of K and L capable of producing 60 units of output is:

Accepted Answer

A)  L = 5 and K = 6.66. 
B)  L = 7.5 and K = 5. 
C)  L = 6 and K = 6. 
D)  L = 0 and K = 10. 
E)  L = 15 and K = 0. 
A)  L = 5 and K = 6.66. 
B)  L = 7.5 and K = 5. 
C)  L = 6 and K = 6. 
D)  L = 0 and K = 10. 
E)  L = 15 and K = 0.

Question 4

A straight line drawn from the origin is tangent to a short-run production function with only one input,labor.At the quantity of labor where the tangency occurs:

Accepted Answer

A)  the average product of labor is at a maximum. 
B)  the marginal product of labor is at a maximum. 
C)  the marginal product of labor is increasing. 
D)  the average product of labor is increasing. 
E)  the total product of labor is at a maximum. 
A)  the average product of labor is at a maximum. 
B)  the marginal product of labor is at a maximum. 
C)  the marginal product of labor is increasing. 
D)  the average product of labor is increasing. 
E)  the total product of labor is at a maximum.

Question 5

In the following table,the marginal product of labor at L = 6 is:

Accepted Answer

A)  3. 
B)  2. 
C)  5. 
D)  4. 
E)  1. 
A)  3. 
B)  2. 
C)  5. 
D)  4. 
E)  1.

Question 6

If output is produced according to Q = 30L + 12K,then the output elasticity is:

Accepted Answer

A)  2. 
B)  0. 
C)  1. 
D)  0.5. 
E)  21. 
A)  2. 
B)  0. 
C)  1. 
D)  0.5. 
E)  21.

Question 7

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 30 employees and served 120 customers.This year,it had 35 employees and served 135 customers.What is the marginal product of labor?

Accepted Answer

A)  2. 
B)  3. 
C)  4. 
D)  5. 
E)  None of the above. 
A)  2. 
B)  3. 
C)  4. 
D)  5. 
E)  None of the above.

Question 8

If rice can be produced using water and seed according to Q = WS,where water,W,costs $3 and seed,S,costs $3,what is the cost-minimizing combination of water and seed capable of producing 144 units of rice?

Accepted Answer

A)  W = 64, S = 0. 
B)  W = 0, S = 64. 
C)  W = 1, S = 64. 
D)  W = 8, S = 8. 
E)  W = 12, S = 12. 
A)  W = 64, S = 0. 
B)  W = 0, S = 64. 
C)  W = 1, S = 64. 
D)  W = 8, S = 8. 
E)  W = 12, S = 12.

Question 9

The law of diminishing marginal returns states that:

Accepted Answer

A)  the marginal product of labor declines as all inputs are increased. 
B)  production functions exhibit decreasing returns to scale. 
C)  the marginal product of labor returns as more capital is used. 
D)  the marginal product of a factor eventually diminishes as more of the input is used, holding other inputs fixed. 
E)  the marginal product of a factor always diminishes as more of the input is used, holding other inputs fixed. 
A)  the marginal product of labor declines as all inputs are increased. 
B)  production functions exhibit decreasing returns to scale. 
C)  the marginal product of labor returns as more capital is used. 
D)  the marginal product of a factor eventually diminishes as more of the input is used, holding other inputs fixed. 
E)  the marginal product of a factor always diminishes as more of the input is used, holding other inputs fixed.

Question 10

The marginal rate of technical substitution between two inputs:

Accepted Answer

A)  shows the rate at which one input can be traded for another, holding output constant. 
B)  shows the efficient combination of inputs. 
C)  increases as we move down an isoquant. 
D)  shows the rate at which output can be increased by using more of both inputs. 
E)  shows the rate at which output decreases when using less of one of the inputs. 
A)  shows the rate at which one input can be traded for another, holding output constant. 
B)  shows the efficient combination of inputs. 
C)  increases as we move down an isoquant. 
D)  shows the rate at which output can be increased by using more of both inputs. 
E)  shows the rate at which output decreases when using less of one of the inputs.

Question 11

In the following table,the average product of labor at L = 10 is:

Accepted Answer

A)  -5. 
B)  0.5. 
C)  2. 
D)  3. 
E)  -1. 
A)  -5. 
B)  0.5. 
C)  2. 
D)  3. 
E)  -1.

Question 12

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 60 employees and served 120 customers.This year,it had 70 employees and served 140 customers.What is the marginal product of labor?

Accepted Answer

A)  2. 
B)  3. 
C)  4. 
D)  5. 
E)  None of the above. 
A)  2. 
B)  3. 
C)  4. 
D)  5. 
E)  None of the above.

Question 13

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 30 employees and served 120 customers.This year,it had 35 employees and served 135 customers.The average product of labor is at a maximum when the number of customers is:

Accepted Answer

A)  less then 120. 
B)  equal to 120. 
C)  between 120 and 135. 
D)  equal to 135. 
E)  greater than 135. 
A)  less then 120. 
B)  equal to 120. 
C)  between 120 and 135. 
D)  equal to 135. 
E)  greater than 135.

Question 14

When average product is at a maximum,marginal product is:

Accepted Answer

A)  zero. 
B)  increasing. 
C)  equal to average product. 
D)  greater than average product. 
E)  less than average product. 
A)  zero. 
B)  increasing. 
C)  equal to average product. 
D)  greater than average product. 
E)  less than average product.

Question 15

The average product of labor is defined as the:

Accepted Answer

A)  change in output divided by the change in labor input usage. 
B)  change in labor input usage divided by the change in output. 
C)  output divided by the labor input usage. 
D)  labor input usage divided by the output level. 
E)  output divided by the marginal product of labor. 
A)  change in output divided by the change in labor input usage. 
B)  change in labor input usage divided by the change in output. 
C)  output divided by the labor input usage. 
D)  labor input usage divided by the output level. 
E)  output divided by the marginal product of labor.

Question 16

Output elasticity can be defined as the:

Accepted Answer

A)  percentage change in output divided by the (equal) percentage change in all inputs. 
B)  change in output divided by the change in all inputs. 
C)  change in inputs divided by the change in output. 
D)  change in output divided by the change in one input. 
E)  percentage change in output divided by the (average) percentage change in all inputs. 
A)  percentage change in output divided by the (equal) percentage change in all inputs. 
B)  change in output divided by the change in all inputs. 
C)  change in inputs divided by the change in output. 
D)  change in output divided by the change in one input. 
E)  percentage change in output divided by the (average) percentage change in all inputs.

Question 17

In the following table,the marginal product of labor at L = 4 is:

Accepted Answer

A)  7. 
B)  11. 
C)  17. 
D)  16. 
E)  6. 
A)  7. 
B)  11. 
C)  17. 
D)  16. 
E)  6.

Question 18

The marginal product of labor can be illustrated geometrically as the:

Accepted Answer

A)  slope of the total product curve with respect to labor. 
B)  slope of the total product curve with respect to capital. 
C)  slope of a chord from the origin out to the total product curve at the specified level of labor. 
D)  inverse of the slope of a chord from the origin out to the total product curve at the specified level of labor. 
E)  slope of the total product curve with respect to labor divided by the slope of the total product curve with respect to capital. 
A)  slope of the total product curve with respect to labor. 
B)  slope of the total product curve with respect to capital. 
C)  slope of a chord from the origin out to the total product curve at the specified level of labor. 
D)  inverse of the slope of a chord from the origin out to the total product curve at the specified level of labor. 
E)  slope of the total product curve with respect to labor divided by the slope of the total product curve with respect to capital.

Question 19

If labor is on the vertical axis and capital is on the horizontal axis,the slope of an isocost line is given by:

Accepted Answer

A)  -PL / PK. 
B)  -PK / PL. 
C)  -PKPL. 
D)  -MPL / MPK. 
E)  -MPK / MPL. 
A)  -PL / PK. 
B)  -PK / PL. 
C)  -PKPL. 
D)  -MPL / MPK. 
E)  -MPK / MPL.

Question 20

A production function is a table,a graph,or an equation showing the:

Accepted Answer

A)  least-cost method of producing output. 
B)  optimal combination of inputs. 
C)  maximum output that can be achieved from specified levels of inputs. 
D)  combinations of inputs that can be produced with equal costs. 
E)  optimal production technology that a firm should employ. 
A)  least-cost method of producing output. 
B)  optimal combination of inputs. 
C)  maximum output that can be achieved from specified levels of inputs. 
D)  combinations of inputs that can be produced with equal costs. 
E)  optimal production technology that a firm should employ.

Isoquants usually slope downward (from left to right)because:

Increasing returns to scale:

Output is produced according to Q = 4L + 6K,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $12 and the price of L is $6,then the cost-minimizing combination of K and L capable of producing 60 units of output is:

A straight line drawn from the origin is tangent to a short-run production function with only one input,labor.At the quantity of labor where the tangency occurs:

In the following table,the marginal product of labor at L = 6 is:

If output is produced according to Q = 30L + 12K,then the output elasticity is:

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 30 employees and served 120 customers.This year,it had 35 employees and served 135 customers.What is the marginal product of labor?

If rice can be produced using water and seed according to Q = WS,where water,W,costs $3 and seed,S,costs $3,what is the cost-minimizing combination of water and seed capable of producing 144 units of rice?

The law of diminishing marginal returns states that:

The marginal rate of technical substitution between two inputs:

In the following table,the average product of labor at L = 10 is:

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 60 employees and served 120 customers.This year,it had 70 employees and served 140 customers.What is the marginal product of labor?

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 30 employees and served 120 customers.This year,it had 35 employees and served 135 customers.The average product of labor is at a maximum when the number of customers is:

When average product is at a maximum,marginal product is:

The average product of labor is defined as the:

Output elasticity can be defined as the:

In the following table,the marginal product of labor at L = 4 is:

The marginal product of labor can be illustrated geometrically as the:

If labor is on the vertical axis and capital is on the horizontal axis,the slope of an isocost line is given by:

A production function is a table,a graph,or an equation showing the:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Exam 5: Production Theory

Isoquants usually slope downward (from left to right)because:

Increasing returns to scale:

Output is produced according to Q = 4L + 6K,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $12 and the price of L is $6,then the cost-minimizing combination of K and L capable of producing 60 units of output is:

A straight line drawn from the origin is tangent to a short-run production function with only one input,labor.At the quantity of labor where the tangency occurs:

In the following table,the marginal product of labor at L = 6 is:

If output is produced according to Q = 30L + 12K,then the output elasticity is:

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 30 employees and served 120 customers.This year,it had 35 employees and served 135 customers.What is the marginal product of labor?

If rice can be produced using water and seed according to Q = WS,where water,W,costs $3 and seed,S,costs $3,what is the cost-minimizing combination of water and seed capable of producing 144 units of rice?

The law of diminishing marginal returns states that:

The marginal rate of technical substitution between two inputs:

In the following table,the average product of labor at L = 10 is:

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 60 employees and served 120 customers.This year,it had 70 employees and served 140 customers.What is the marginal product of labor?

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 30 employees and served 120 customers.This year,it had 35 employees and served 135 customers.The average product of labor is at a maximum when the number of customers is:

When average product is at a maximum,marginal product is:

The average product of labor is defined as the:

Output elasticity can be defined as the:

In the following table,the marginal product of labor at L = 4 is:

The marginal product of labor can be illustrated geometrically as the:

If labor is on the vertical axis and capital is on the horizontal axis,the slope of an isocost line is given by:

A production function is a table,a graph,or an equation showing the:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters