Question 1

-The above figure shows the isoquants for producing steel.Decreasing returns to scale are

Accepted Answer

A)  present when producing more than 10,000 tons. 
B)  present when producing more than 20,000 tons. 
C)  present when producing more than 30,000 tons. 
D)  never present. 
A)  present when producing more than 10,000 tons. 
B)  present when producing more than 20,000 tons. 
C)  present when producing more than 30,000 tons. 
D)  never present.

Question 2

Show that increasing returns to scale can co-exist with diminishing marginal productivity.To do so,provide an example of a production function with IRTS and diminishing marginal returns.

Accepted Answer

A number of production functio

Question 3

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

Decreasing returns to scale may occur as increasing the amount of inputs used

Accepted Answer

A)  increases specialization. 
B)  always increases the amount of output produced. 
C)  may cause coordination difficulties. 
D)  increases efficiency. 
A)  increases specialization. 
B)  always increases the amount of output produced. 
C)  may cause coordination difficulties. 
D)  increases efficiency.

Question 5

Blowdryer businessman Max Power is starting a new hairdryer business.Max estimates his production function to be q=KL⁰.⁵.Max has 60 units of capital (K=60).Derive Max's MP and AP of labor for the current level of capital.

Accepted Answer

The AP = q

Question 6

Efficient production occurs if a firm

Accepted Answer

A)  cannot produce its current level of output with fewer inputs. 
B)  given the quantity of inputs, cannot produce more output. 
C)  maximizes profit. 
D)  All of the above. 
A)  cannot produce its current level of output with fewer inputs. 
B)  given the quantity of inputs, cannot produce more output. 
C)  maximizes profit. 
D)  All of the above.

Question 7

Suppose the production of VCRs can be represented by the following production function: 
q = L⁰.⁴ K⁰.⁴.The firm currently produces q₁ units.If all inputs doubled,the new level of output will equal

Accepted Answer

A)  2⁰.⁴ q₁. 
B)  2⁰.⁸ q₁. 
C)  0.8 q₁. 
D)  1.6 q₁. 
A)  2⁰.⁴ q₁. 
B)  2⁰.⁸ q₁. 
C)  0.8 q₁. 
D)  1.6 q₁.

Question 8

Long-Run Production: Two Variable Inputs
 
-The production function for hamburgers can be written as q = 0.1X + 0.1Y,where X is Canadian ground beef and Y is U.S.beef,both measured in pounds.Which graph in the figure best represents the isoquants for the hamburger production when U.S.ground beef is on the vertical axis and Canadian ground beef 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 9

Ed's building company has the following production function
q = 20L - L²
where q is the number of houses built and L is the quantity of labor Ed employs.
a.Derive the MP and AP.
b.For what values of L is the MP>0? For what values of L is the MP diminishing?
c.Draw the MP and AP on a graph.

Accepted Answer

a.MP = dq/dL = 20 - 2L; AP = 2

Question 10

Let the production function be q = ALᵃKᵇ.The function exhibits decreasing 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

Long-Run Production: Two Variable Inputs
 
-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 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 12

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 13

When diminishing marginal returns set in,total product will

Accepted Answer

A)  increase at an increasing speed. 
B)  increase at a decreasing speed. 
C)  decrease at an increasing speed. 
D)  decrease at a decreasing speed. 
A)  increase at an increasing speed. 
B)  increase at a decreasing speed. 
C)  decrease at an increasing speed. 
D)  decrease at a decreasing speed.

Question 14

The production function Q = 0.8X + 0.6Y exhibits

Accepted Answer

A)  increasing return to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  economies of scale. 
A)  increasing return to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  economies of scale.

Question 15

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

Accepted Answer

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

Question 16

Suppose the production function for a certain device is q = L + K.If neutral 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 17

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

Accepted Answer

Diminishing returns to labor means that

Question 18

JC's music production company provides artists with studio time and a backing band to record with.In providing the rhythm track,JC can employ drum machines or drummers.Regardless of the quantity of output JC produces,he can substitute two drummers with one drum machine-drum machines tire out less quickly).Draw a few isoquant lines (with numbers)reflecting this production function for the rhythm track.Determine the function representing this production process.

Accepted Answer

The drummers and drum machines are perfe

Question 19

For the following, please answer "True" or "False" and explain why.
-A firm operating with diminishing total returns cannot be profit maximizing.

Accepted Answer

A) True 
 B)False

Question 20

For what values of a and b will the following production function exhibit increasing,decreasing or constant returns to scale?
q = (Lᵃ + Kᵃ)¹/ᵇ

Accepted Answer

Let q=f(L,K).Then
f(2L,2K)= ((

-The above figure shows the isoquants for producing steel.Decreasing returns to scale are

Show that increasing returns to scale can co-exist with diminishing marginal productivity.To do so,provide an example of a production function with IRTS and diminishing marginal returns.

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

Decreasing returns to scale may occur as increasing the amount of inputs used

Blowdryer businessman Max Power is starting a new hairdryer business.Max estimates his production function to be q=KL⁰.⁵.Max has 60 units of capital (K=60).Derive Max's MP and AP of labor for the current level of capital.

Efficient production occurs if a firm

Suppose the production of VCRs can be represented by the following production function: q = L⁰.⁴ K⁰.⁴.The firm currently produces q₁ units.If all inputs doubled,the new level of output will equal

Ed's building company has the following production function q = 20L - L² where q is the number of houses built and L is the quantity of labor Ed employs. a.Derive the MP and AP. b.For what values of L is the MP>0? For what values of L is the MP diminishing? c.Draw the MP and AP on a graph.

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

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

When diminishing marginal returns set in,total product will

The production function Q = 0.8X + 0.6Y exhibits

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

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

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

For the following, please answer "True" or "False" and explain why. -A firm operating with diminishing total returns cannot be profit maximizing.

For what values of a and b will the following production function exhibit increasing,decreasing or constant returns to scale? q = (Lᵃ + Kᵃ)¹/ᵇ

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 above figure shows the isoquants for producing steel.Decreasing returns to scale are

Show that increasing returns to scale can co-exist with diminishing marginal productivity.To do so,provide an example of a production function with IRTS and diminishing marginal returns.

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

Decreasing returns to scale may occur as increasing the amount of inputs used

Blowdryer businessman Max Power is starting a new hairdryer business.Max estimates his production function to be q=KL⁰.⁵.Max has 60 units of capital (K=60).Derive Max's MP and AP of labor for the current level of capital.

Efficient production occurs if a firm

Suppose the production of VCRs can be represented by the following production function: q = L⁰.⁴ K⁰.⁴.The firm currently produces q₁ units.If all inputs doubled,the new level of output will equal

Ed's building company has the following production function q = 20L - L² where q is the number of houses built and L is the quantity of labor Ed employs. a.Derive the MP and AP. b.For what values of L is the MP>0? For what values of L is the MP diminishing? c.Draw the MP and AP on a graph.

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

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

When diminishing marginal returns set in,total product will

The production function Q = 0.8X + 0.6Y exhibits

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

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

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

For the following, please answer "True" or "False" and explain why. -A firm operating with diminishing total returns cannot be profit maximizing.

For what values of a and b will the following production function exhibit increasing,decreasing or constant returns to scale? q = (Lᵃ + Kᵃ)¹/ᵇ

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