Question 1

Describe the relationship between marginal productivity and average productivity.Use calculus or a graph to support your answer.

Accepted Answer

AP = Q(L)/L.dAP/dL = ([L ∗ MP]

Question 2

For the following, please answer "True" or "False" and explain why.
-Cobb-Douglas production functions can never possess varying returns to scale.

Accepted Answer

A) True 
 B)False

Question 3

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 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 works in the agricultural sector. 
D)  All of the above.

Question 4

For the following, please answer "True" or "False" and explain why.
-Changing how production is organized cannot result in changes in productivity.

Accepted Answer

A) True 
 B)False

Question 5

Total Product 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 6

The slope of an isoquant tells us

Accepted Answer

A)  how much output increases when both inputs are increased. 
B)  the increase in MPL when capital increases. 
C)  the decrease in capital necessary to keep output constant when labor increases by one unit. 
D)  the decrease in capital necessary to keep MPL constant when labor increases by one unit. 
A)  how much output increases when both inputs are increased. 
B)  the increase in MPL when capital increases. 
C)  the decrease in capital necessary to keep output constant when labor increases by one unit. 
D)  the decrease in capital necessary to keep MPL constant when labor increases by one unit.

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

Dell computers has increased production efficiency by

Accepted Answer

A)  producing output with fewer inputs. 
B)  expanding the amount of inputs used. 
C)  outsourcing production. 
D)  relying on decreasing returns to scale. 
A)  producing output with fewer inputs. 
B)  expanding the amount of inputs used. 
C)  outsourcing production. 
D)  relying on decreasing returns to scale.

Question 9

Suppose firms A and B each make T-shirts.Firm A's production function is q = L⁰.⁵ K⁰.⁵.Firm B's production function is q = 1.2 ∗ L⁰.⁵ K⁰.⁵.If the two firms each hire the same amounts of capital and labor,compare the two firms in terms of APL and MPL.

Accepted Answer

Firm B's APL and MPL

Question 10

Joey cuts grass during the summer.He owns one lawn mower.For him,the short run is equal to

Accepted Answer

A)  the amount of time it takes to acquire more customers. 
B)  the amount of time it takes to hire an additional employee. 
C)  the amount of time it takes to hire an additional employee and buy another lawn mower. 
D)  the amount of time it takes to mow one lawn. 
A)  the amount of time it takes to acquire more customers. 
B)  the amount of time it takes to hire an additional employee. 
C)  the amount of time it takes to hire an additional employee and buy another lawn mower. 
D)  the amount of time it takes to mow one lawn.

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

Question 12

Justin's bank employs tellers and ATMs.Both are able to serve clients in the exact same way and therefore are perfect substitutes.Describe the elasticity of substitution between the two inputs.

Accepted Answer

The elasticity is infinite.The

Question 13

Suppose the production function for a certain device is q = L + K.If a labor-saving technical change has occurred,which of the following could be the new production function?

Accepted Answer

A)  q = L + 5K 
B)  q = 5 ∗ (L + K) 
C)  q = 5L + K 
D)  All of the above are possible. 
A)  q = L + 5K 
B)  q = 5 ∗ (L + K) 
C)  q = 5L + K 
D)  All of the above are possible.

Question 14

Production occurs using the fixed-proportion combination of one worker for every one unit of capital.Draw the isoquants for this production function.After one unit of output is produced,does this production function exhibit constant,increasing,or decreasing returns to scale?

Accepted Answer

@#IMG-DLM& See the above figur

Question 15

Suppose the production function for T-shirts can be represented as q = L⁰.²⁵ K⁰.⁷⁵.Show that the production function has constant returns to scale.

Accepted Answer

When L = L₁ and K = K₁,q = q₁.Let L₂ = γ

Question 16

Isoquants that are downward-sloping straight lines imply 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 17

The marginal rate of technical substitution always equals

Accepted Answer

A)  the slope of the total product curve. 
B)  the ratio of the marginal products of inputs. 
C)  the change in output due to a change in the amount of one input. 
D)  the distance between two isoquants. 
A)  the slope of the total product curve. 
B)  the ratio of the marginal products of inputs. 
C)  the change in output due to a change in the amount of one input. 
D)  the distance between two isoquants.

Question 18

For the following, please answer "True" or "False" and explain why.
-The length of the short-run is the same for all firms.

Accepted Answer

A) True 
 B)False

Question 19

Economists typically assume that the owners of firms wish to

Accepted Answer

A)  produce efficiently. 
B)  maximize sales revenues. 
C)  maximize profits. 
D)  All of the above. 
A)  produce efficiently. 
B)  maximize sales revenues. 
C)  maximize profits. 
D)  All of the above.

Question 20

For the following, please answer "True" or "False" and explain why.
-Unlike indifference curves,isoquants can intersect.

Accepted Answer

A) True 
 B)False

Describe the relationship between marginal productivity and average productivity.Use calculus or a graph to support your answer.

For the following, please answer "True" or "False" and explain why. -Cobb-Douglas production functions can never possess varying returns to scale.

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

For the following, please answer "True" or "False" and explain why. -Changing how production is organized cannot result in changes in productivity.

Total Product is

The slope of an isoquant tells us

The implementation of the assembly line is an example how

Dell computers has increased production efficiency by

Suppose firms A and B each make T-shirts.Firm A's production function is q = L⁰.⁵ K⁰.⁵.Firm B's production function is q = 1.2 ∗ L⁰.⁵ K⁰.⁵.If the two firms each hire the same amounts of capital and labor,compare the two firms in terms of APL and MPL.

Joey cuts grass during the summer.He owns one lawn mower.For him,the short run is equal to

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?

Justin's bank employs tellers and ATMs.Both are able to serve clients in the exact same way and therefore are perfect substitutes.Describe the elasticity of substitution between the two inputs.

Suppose the production function for a certain device is q = L + K.If a labor-saving technical change has occurred,which of the following could be the new production function?

Production occurs using the fixed-proportion combination of one worker for every one unit of capital.Draw the isoquants for this production function.After one unit of output is produced,does this production function exhibit constant,increasing,or decreasing returns to scale?

Suppose the production function for T-shirts can be represented as q = L⁰.²⁵ K⁰.⁷⁵.Show that the production function has constant returns to scale.

Isoquants that are downward-sloping straight lines imply that the inputs

The marginal rate of technical substitution always equals

For the following, please answer "True" or "False" and explain why. -The length of the short-run is the same for all firms.

Economists typically assume that the owners of firms wish to

For the following, please answer "True" or "False" and explain why. -Unlike indifference curves,isoquants can intersect.

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

Describe the relationship between marginal productivity and average productivity.Use calculus or a graph to support your answer.

For the following, please answer "True" or "False" and explain why. -Cobb-Douglas production functions can never possess varying returns to scale.

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

For the following, please answer "True" or "False" and explain why. -Changing how production is organized cannot result in changes in productivity.

Total Product is

The slope of an isoquant tells us

The implementation of the assembly line is an example how

Dell computers has increased production efficiency by

Suppose firms A and B each make T-shirts.Firm A's production function is q = L⁰.⁵ K⁰.⁵.Firm B's production function is q = 1.2 ∗ L⁰.⁵ K⁰.⁵.If the two firms each hire the same amounts of capital and labor,compare the two firms in terms of APL and MPL.

Joey cuts grass during the summer.He owns one lawn mower.For him,the short run is equal to

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?

Justin's bank employs tellers and ATMs.Both are able to serve clients in the exact same way and therefore are perfect substitutes.Describe the elasticity of substitution between the two inputs.

Suppose the production function for a certain device is q = L + K.If a labor-saving technical change has occurred,which of the following could be the new production function?

Production occurs using the fixed-proportion combination of one worker for every one unit of capital.Draw the isoquants for this production function.After one unit of output is produced,does this production function exhibit constant,increasing,or decreasing returns to scale?

Suppose the production function for T-shirts can be represented as q = L⁰.²⁵ K⁰.⁷⁵.Show that the production function has constant returns to scale.

Isoquants that are downward-sloping straight lines imply that the inputs

The marginal rate of technical substitution always equals

For the following, please answer "True" or "False" and explain why. -The length of the short-run is the same for all firms.

Economists typically assume that the owners of firms wish to

For the following, please answer "True" or "False" and explain why. -Unlike indifference curves,isoquants can intersect.

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