Question 1

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 2

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 3

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 4

Returns to specialization can occur when

Accepted Answer

A)  increasing the amount of labor allows individuals 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 individuals 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 5

Returns to scale is a concept that operates

Accepted Answer

A)  only in the short run. 
B)  only in the long run. 
C)  in both the long run and the short run. 
D)  in either the long run or the short run but never both. 
A)  only in the short run. 
B)  only in the long run. 
C)  in both the long run and the short run. 
D)  in either the long run or the short run but never both.

Question 6

Lectures in microeconomics can be delivered either by an instructor (labor)or a movie (capital)or any combination of both.Each minute of the instructor's time delivers the same amount of information as a minute of the movie.Which graph in the above figure best represents the isoquants for lectures in microeconomics when capital per day is on the vertical axis and 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 7

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 8

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 9

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 10

-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 11

Suppose the production of DVD players can be represented by the following production function: q =     .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 12

Which of the following market structures is likely to have the lowest productivity,given identical inputs?

Accepted Answer

A)  oligopoly 
B)  monopsony 
C)  competitive 
D)  monopoly 
A)  oligopoly 
B)  monopsony 
C)  competitive 
D)  monopoly

Question 13

The slope of an isoquant

Accepted Answer

A)  gives the substitutability of inputs while keeping output constant. 
B)  shows how output varies while keeping inputs constant. 
C)  is independent of the marginal product of capital. 
D)  shows the firm's returns to scale. 
A)  gives the substitutability of inputs while keeping output constant. 
B)  shows how output varies while keeping inputs constant. 
C)  is independent of the marginal product of capital. 
D)  shows the firm's returns to scale.

Question 14

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 15

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, larger percentage of today's labor 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, larger percentage of today's labor works in the agricultural sector. 
D)  All of the above.

Question 16

The Average Product of Labor 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 17

Which of the following statements is TRUE?

Accepted Answer

A)  A Cobb-Douglas production function can have different returns to scale at different output levels. 
B)  It is impossible to have increasing returns to scale for one output level, and decreasing returns to scale for a different output level. 
C)  It is possible to have increasing returns to scale for one output level, and decreasing returns to scale for a different output level. 
D)  None of the above. 
A)  A Cobb-Douglas production function can have different returns to scale at different output levels. 
B)  It is impossible to have increasing returns to scale for one output level, and decreasing returns to scale for a different output level. 
C)  It is possible to have increasing returns to scale for one output level, and decreasing returns to scale for a different output level. 
D)  None of the above.

Question 18

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 19

Given the production function q = 4LK,what is the marginal product of labor when capital is fixed at 25?

Accepted Answer

A)  4K 
B)  100 
C)  100K 
D)  100L 
A)  4K 
B)  100 
C)  100K 
D)  100L

Question 20

Consider Johnson Mechanical is the only seller in its particular regional market.On the other hand,Amato Mechanical is one of twenty sellers in its particular regional market.All else equal,we would expect

Accepted Answer

A)  Johnson Mechanical to be relatively more productive than Amato Mechanical. 
B)  Amato Mechanical to be relatively more productive than Johnson Mechanical. 
C)  no difference in productivity between the two firms. 
D)  Amato Mechanical might be more productive than Johnson Mechanical, but only if management for Amato Mechanical is a sole proprietorship. 
A)  Johnson Mechanical to be relatively more productive than Amato Mechanical. 
B)  Amato Mechanical to be relatively more productive than Johnson Mechanical. 
C)  no difference in productivity between the two firms. 
D)  Amato Mechanical might be more productive than Johnson Mechanical, but only if management for Amato Mechanical is a sole proprietorship.

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

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

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)?

Returns to specialization can occur when

Returns to scale is a concept that operates

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

Returns to scale refers to the change in output when

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

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

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

Which of the following market structures is likely to have the lowest productivity,given identical inputs?

The slope of an isoquant

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

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

The Average Product of Labor is

Which of the following statements is TRUE?

An isoquant represents levels of capital and labor that

Given the production function q = 4LK,what is the marginal product of labor when capital is fixed at 25?

Consider Johnson Mechanical is the only seller in its particular regional market.On the other hand,Amato Mechanical is one of twenty sellers in its particular regional market.All else equal,we would expect

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

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

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

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)?

Returns to specialization can occur when

Returns to scale is a concept that operates

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

Returns to scale refers to the change in output when

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

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

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

Which of the following market structures is likely to have the lowest productivity,given identical inputs?

The slope of an isoquant

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

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

The Average Product of Labor is

Which of the following statements is TRUE?

An isoquant represents levels of capital and labor that

Given the production function q = 4LK,what is the marginal product of labor when capital is fixed at 25?

Consider Johnson Mechanical is the only seller in its particular regional market.On the other hand,Amato Mechanical is one of twenty sellers in its particular regional market.All else equal,we would expect

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