Question 1

The returns to scale of the production function Q = 50 L⁰.⁴ K⁰.² are

Accepted Answer

A)  50. 
B)  .6. 
C)  .8. 
D)  50⁰.⁶. 
A)  50. 
B)  .6. 
C)  .8. 
D)  50⁰.⁶.

Question 2

Suppose the production of VCRs can be represented by the following production function: ?q = L⁰.⁴ K⁰.⁴.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 3

In the long run,all factors of production are

Accepted Answer

A)  variable. 
B)  fixed. 
C)  materials. 
D)  rented. 
A)  variable. 
B)  fixed. 
C)  materials. 
D)  rented.

Question 4

L-shaped isoquants imply that production requires that the inputs

Accepted Answer

A)  are perfect substitutes. 
B)  are imperfect substitutes. 
C)  cannot be used together. 
D)  must be used together in a certain proportion. 
A)  are perfect substitutes. 
B)  are imperfect substitutes. 
C)  cannot be used together. 
D)  must be used together in a certain proportion.

Question 5

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

Accepted Answer

A)  is constant. 
B)  equals the marginal productivity of labor. 
C)  Both A and B above. 
D)  Either A or B above but not both. 
A)  is constant. 
B)  equals the marginal productivity of labor. 
C)  Both A and B above. 
D)  Either A or B above but not both.

Question 6

The steeper an isoquant is,

Accepted Answer

A)  the greater is the marginal productivity of labor relative to that of capital. 
B)  the greater is the substitutability between capital and labor. 
C)  the greater is the need to keep capital and labor in fixed proportions. 
D)  the greater is the level of output. 
A)  the greater is the marginal productivity of labor relative to that of capital. 
B)  the greater is the substitutability between capital and labor. 
C)  the greater is the need to keep capital and labor in fixed proportions. 
D)  the greater is the level of output.

Question 7

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 certain 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 certain proportion. 
C)  capital is not productive. 
D)  labor is not productive.

Question 8

-The above figure shows the isoquants for producing steel.When producing more than 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 9

At any given point on the curve,the slope of the total product curve always equals

Accepted Answer

A)  the ratio of the marginal product and the average product. 
B)  the change in input divided by the change in output. 
C)  the average product of the input. 
D)  the marginal product of the input. 
A)  the ratio of the marginal product and the average product. 
B)  the change in input divided by the change in output. 
C)  the average product of the input. 
D)  the marginal product of the input.

Question 10

Let the production function be q = ALᵃKᵇ.The function exhibits increasing 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 11

Explain why labor might not always be a variable input.

Accepted Answer

In the real world,units of labor are not

Question 12

Explain how firms that each produce as efficiently as they can,may not be equally productive.

Accepted Answer

Firm-specific characteristics

Question 13

If the average productivity of labor equals the marginal productivity of labor,then

Accepted Answer

A)  the average productivity of labor is at a maximum. 
B)  the marginal productivity of labor is at a maximum. 
C)  Both A and B above. 
D)  Neither A nor B above. 
A)  the average productivity of labor is at a maximum. 
B)  the marginal productivity of labor is at a maximum. 
C)  Both A and B above. 
D)  Neither A nor B above.

Question 14

A firm where owners are usually not managers and not personally liable for the firms' debts is a

Accepted Answer

A)  sole proprietorship. 
B)  general partnership. 
C)  corporation. 
D)  None of above. 
A)  sole proprietorship. 
B)  general partnership. 
C)  corporation. 
D)  None of above.

Question 15

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 16

-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 17

For the following, please answer "True" or "False" and explain why.
-Only corporations benefit from limited liability.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

In the short run,MPL = 0.25 ∗

Question 19

Homer's Donut Shoppe has the production function q = 10L +20L² - 5L³.The average product of labor is

Accepted Answer

A)  AP = 10 + 20L - 5L² 
B)  AP = 10 + 40L - 15L² 
C)  AP = 10L 
D)  AP = 10 + 20L 
A)  AP = 10 + 20L - 5L² 
B)  AP = 10 + 40L - 15L² 
C)  AP = 10L 
D)  AP = 10 + 20L

Question 20

At low levels of production,marginal productivity of labor increases as labor increases.At high levels of production,marginal productivity of labor decreases as labor increases.Are these two statements contradictory? Explain.

Accepted Answer

No.At low levels of production

The returns to scale of the production function Q = 50 L⁰.⁴ K⁰.² are

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

In the long run,all factors of production are

L-shaped isoquants imply that production requires that the inputs

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

The steeper an isoquant is,

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

-The above figure shows the isoquants for producing steel.When producing more than 20,000 tons there are

At any given point on the curve,the slope of the total product curve always equals

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

Explain why labor might not always be a variable input.

Explain how firms that each produce as efficiently as they can,may not be equally productive.

If the average productivity of labor equals the marginal productivity of labor,then

A firm where owners are usually not managers and not personally liable for the firms' debts is a

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?

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

For the following, please answer "True" or "False" and explain why. -Only corporations benefit from limited liability.

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

Homer's Donut Shoppe has the production function q = 10L +20L² - 5L³.The average product of labor is

At low levels of production,marginal productivity of labor increases as labor increases.At high levels of production,marginal productivity of labor decreases as labor increases.Are these two statements contradictory? Explain.

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 6: Firms and Production

The returns to scale of the production function Q = 50 L⁰.⁴ K⁰.² are

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

In the long run,all factors of production are

L-shaped isoquants imply that production requires that the inputs

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

The steeper an isoquant is,

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

-The above figure shows the isoquants for producing steel.When producing more than 20,000 tons there are

At any given point on the curve,the slope of the total product curve always equals

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

Explain why labor might not always be a variable input.

Explain how firms that each produce as efficiently as they can,may not be equally productive.

If the average productivity of labor equals the marginal productivity of labor,then

A firm where owners are usually not managers and not personally liable for the firms' debts is a

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?

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

For the following, please answer "True" or "False" and explain why. -Only corporations benefit from limited liability.

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

Homer's Donut Shoppe has the production function q = 10L +20L² - 5L³.The average product of labor is

At low levels of production,marginal productivity of labor increases as labor increases.At high levels of production,marginal productivity of labor decreases as labor increases.Are these two statements contradictory? Explain.

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters