Question 1

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 2

An isoquant represents levels of capital and labor that

Accepted Answer

A) have constant marginal productivity. 
B) yield the same level of output. 
C) incur the same total cost. 
D) All of the above. 
A) have constant marginal productivity. 
B) yield the same level of output. 
C) incur the same total cost. 
D) All of the above.

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 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 5

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 6

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 7

-In the above figure, Graph D with units of capital on the vertical axis and units of labor on the horizontal axis implies that

Accepted Answer

A) the marginal product of labor is increasing as more labor is employed. 
B) the marginal product of labor is decreasing as more labor is employed. 
C) the capital and labor are perfect substitutes. 
D) capital and labor have to be employed in fixed proportions. 
A) the marginal product of labor is increasing as more labor is employed. 
B) the marginal product of labor is decreasing as more labor is employed. 
C) the capital and labor are perfect substitutes. 
D) capital and labor have to be employed in fixed proportions.

Question 8

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 9

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 10

If a firms cuts inputs in half, and output falls by more than half, then there are

Accepted Answer

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

Question 11

Thomas Malthus' prediction of mass starvation resulting from diminishing marginal returns has NOT been fulfilled because

Accepted Answer

A) the law of diminishing marginal returns did not hold in this case. 
B) Malthus ignored other factors like technological change. 
C) relative to Malthus' day, a larger percentage of today's labor force works in the agricultural sector. 
D) All of the above. 
A) the law of diminishing marginal returns did not hold in this case. 
B) Malthus ignored other factors like technological change. 
C) relative to Malthus' day, a larger percentage of today's labor force works in the agricultural sector. 
D) All of the above.

Question 12

Amazon.com purchased Kiva Systems, intending to use its robots in warehouses. This is an example of

Accepted Answer

A) neutral technical change. 
B) labor-saving technical change. 
C) division of labor. 
D) economies of scale. 
A) neutral technical change. 
B) labor-saving technical change. 
C) division of labor. 
D) economies of scale.

Question 13

-Lectures in microeconomics can be delivered either by an instructor (labor)or a movie (capital)or any combination of both. Yet, it gets harder and harder to substitute more movies for an instructor the more movies are already used. Which graph in the above figure best represents the isoquants for lectures in microeconomics 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 14

During the "computer revolution" of the 1980s and 1990s, many firms replaced old technology with new technology. What might explain why firms don't change technology as quickly today?

Accepted Answer

The marginal rate of technical substitut

Question 15

If MPK = 3, and MRTS = -4 what is MPL?

Accepted Answer

A) 12 
B) -12 
C) 4/3 
D) -4/3 
A) 12 
B) -12 
C) 4/3 
D) -4/3

Question 16

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 17

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 18

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 19

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.

Question 20

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

If capital is fixed, but a firm varies labor

An isoquant represents levels of capital and labor that

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 NOT a property of isoquants?

Neutral technical progress allows a firm to

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?

-In the above figure, Graph D with units of capital on the vertical axis and units of labor on the horizontal axis implies that

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?

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

If a firms cuts inputs in half, and output falls by more than half, then there are

Thomas Malthus' prediction of mass starvation resulting from diminishing marginal returns has NOT been fulfilled because

Amazon.com purchased Kiva Systems, intending to use its robots in warehouses. This is an example of

During the "computer revolution" of the 1980s and 1990s, many firms replaced old technology with new technology. What might explain why firms don't change technology as quickly today?

If MPK = 3, and MRTS = -4 what is MPL?

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?

Labor saving nonneutral technical progress allows a firm to

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

Returns to scale refers to the change in output when

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

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

If capital is fixed, but a firm varies labor

An isoquant represents levels of capital and labor that

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 NOT a property of isoquants?

Neutral technical progress allows a firm to

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?

-In the above figure, Graph D with units of capital on the vertical axis and units of labor on the horizontal axis implies that

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?

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

If a firms cuts inputs in half, and output falls by more than half, then there are

Thomas Malthus' prediction of mass starvation resulting from diminishing marginal returns has NOT been fulfilled because

Amazon.com purchased Kiva Systems, intending to use its robots in warehouses. This is an example of

During the "computer revolution" of the 1980s and 1990s, many firms replaced old technology with new technology. What might explain why firms don't change technology as quickly today?

If MPK = 3, and MRTS = -4 what is MPL?

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?

Labor saving nonneutral technical progress allows a firm to

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

Returns to scale refers to the change in output when

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

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