Question 1

-The table in the above figure shows the levels of output resulting from different levels of inputs.At which level of input are there constant returns to scale?

Accepted Answer

A)  400-600 units 
B)  Constant returns to scale exist throughout all levels of production. 
C)  Constant returns to scale do not exist at any level of production. 
D)  No firm conclusions can be drawn. 
A)  400-600 units 
B)  Constant returns to scale exist throughout all levels of production. 
C)  Constant returns to scale do not exist at any level of production. 
D)  No firm conclusions can be drawn.

Question 2

Suppose the production function for a certain device is q = L + 2K.If a 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 = 2L + 4K 
D)  All of the above are possible. 
A)  q = L + 5K 
B)  q = 5 ∗ (L + K) 
C)  q = 2L + 4K 
D)  All of the above are possible.

Question 3

A firm operating with diminishing total returns cannot be profit maximizing.

Accepted Answer

A) True 
 B)False

Question 4

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 5

-In the above figure,Graph D with Capital on the vertical axis and 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 6

Suppose the production of mp3 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

Firms maximize profit when

Accepted Answer

A)  the additional benefit from producing a good equals the additional cost of producing that good. 
B)  MR = MC. 
C)  the derivative of the profit function with respect to output is zero. 
D)  All of the above. 
A)  the additional benefit from producing a good equals the additional cost of producing that good. 
B)  MR = MC. 
C)  the derivative of the profit function with respect to output is zero. 
D)  All of the above.

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

Joey's lawncutting service recently traded in its push mowers for gasoline-powered mowers.Joey still requires one worker per lawnmower; however,more grass is now cut in the same amount of time as before.This is an example of

Accepted Answer

A)  labor-saving technical change. 
B)  non-neutral technical change. 
C)  neutral technical change. 
D)  organizational change. 
A)  labor-saving technical change. 
B)  non-neutral technical change. 
C)  neutral technical change. 
D)  organizational change.

Question 10

Unlike indifference curves,isoquants can intersect.

Accepted Answer

A) True 
 B)False

Question 11

What is the MRTS for a firm with the following production function ,q = 200L0.5K0.5 with L = 4 and K = 16?

Accepted Answer

A)  MRTS = -4 
B)  MRTS = -2 
C)  MRTS = -1 
D)  MRTS = -8 
A)  MRTS = -4 
B)  MRTS = -2 
C)  MRTS = -1 
D)  MRTS = -8

Question 12

The actual time length of the short run is determined by when diminishing marginal returns start.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following inputs is easier to increase in the short run?

Accepted Answer

A)  number of airplanes 
B)  size of the airport terminal 
C)  ticket-counter sales people 
D)  number of luggage carousels 
A)  number of airplanes 
B)  size of the airport terminal 
C)  ticket-counter sales people 
D)  number of luggage carousels

Question 14

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

Accepted Answer

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

Question 15

For a linear production function,q = f(L,K)= 4L + 2K,what is the short-run production function given that capital is fixed at   = 50?

Accepted Answer

A)  q = 4L + 100 
B)  q = 4L + 50 
C)  q = 4L 
D)  q = 104 
A)  q = 4L + 100 
B)  q = 4L + 50 
C)  q = 4L 
D)  q = 104

Question 16

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 17

Were it not for the law of diminishing marginal returns,we could grow the world's food supply from a flowerpot.

Accepted Answer

A) True 
 B)False

Question 18

If a technological change occurs such that the production function shifts from q = 10K0.5 L0.5 to q = 10.5K0.3 L0.5,then the technological change is

Accepted Answer

A)  both neutral and non-neutral. 
B)  neutral. 
C)  non-neutral. 
D)  Not enough information given. 
A)  both neutral and non-neutral. 
B)  neutral. 
C)  non-neutral. 
D)  Not enough information given.

Question 19

A firm can experience increasing,constant and decreasing returns to scale for various levels of output.

Accepted Answer

A) True 
 B)False

Question 20

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.

-The table in the above figure shows the levels of output resulting from different levels of inputs.At which level of input are there constant returns to scale?

Suppose the production function for a certain device is q = L + 2K.If a neutral technical change has occurred,which of the following could be the new production function?

A firm operating with diminishing total returns cannot be profit maximizing.

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?

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

Suppose the production of mp3 players can be represented by the following production function: q = L^0.4K^0.4.Which of the following statements is (are)TRUE?

Firms maximize profit when

Returns to scale refers to the change in output when

Joey's lawncutting service recently traded in its push mowers for gasoline-powered mowers.Joey still requires one worker per lawnmower; however,more grass is now cut in the same amount of time as before.This is an example of

Unlike indifference curves,isoquants can intersect.

What is the MRTS for a firm with the following production function ,q = 200L^0.5K^0.5with L = 4 and K = 16?

The actual time length of the short run is determined by when diminishing marginal returns start.

Which of the following inputs is easier to increase in the short run?

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75.Show that the production function has constant returns to scale.

For a linear production function,q = f(L,K)= 4L + 2K,what is the short-run production function given that capital is fixed at = 50?

Economists typically assume that the owners of firms wish to

Were it not for the law of diminishing marginal returns,we could grow the world's food supply from a flowerpot.

If a technological change occurs such that the production function shifts from q = 10K^0.5 L^0.5 to q = 10.5K^0.³ L^0.5,then the technological change is

A firm can experience increasing,constant and decreasing returns to scale for various levels of output.

L-shaped isoquants imply that production requires that the inputs

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 6: Firms and Production

-The table in the above figure shows the levels of output resulting from different levels of inputs.At which level of input are there constant returns to scale?

Suppose the production function for a certain device is q = L + 2K.If a neutral technical change has occurred,which of the following could be the new production function?

A firm operating with diminishing total returns cannot be profit maximizing.

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?

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

Suppose the production of mp3 players can be represented by the following production function: q = L0.4K0.4.Which of the following statements is (are)TRUE?

Firms maximize profit when

Returns to scale refers to the change in output when

Joey's lawncutting service recently traded in its push mowers for gasoline-powered mowers.Joey still requires one worker per lawnmower; however,more grass is now cut in the same amount of time as before.This is an example of

Unlike indifference curves,isoquants can intersect.

What is the MRTS for a firm with the following production function ,q = 200L0.5K0.5 with L = 4 and K = 16?

The actual time length of the short run is determined by when diminishing marginal returns start.

Which of the following inputs is easier to increase in the short run?

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

For a linear production function,q = f(L,K)= 4L + 2K,what is the short-run production function given that capital is fixed at = 50?

Economists typically assume that the owners of firms wish to

Were it not for the law of diminishing marginal returns,we could grow the world's food supply from a flowerpot.

If a technological change occurs such that the production function shifts from q = 10K0.5 L0.5 to q = 10.5K0.3 L0.5,then the technological change is

A firm can experience increasing,constant and decreasing returns to scale for various levels of output.

L-shaped isoquants imply that production requires that the inputs

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Suppose the production of mp3 players can be represented by the following production function: q = L^0.4K^0.4.Which of the following statements is (are)TRUE?

What is the MRTS for a firm with the following production function ,q = 200L^0.5K^0.5with L = 4 and K = 16?

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75.Show that the production function has constant returns to scale.

If a technological change occurs such that the production function shifts from q = 10K^0.5 L^0.5 to q = 10.5K^0.³ L^0.5,then the technological change is