Question 1

-The table in the above figure shows the levels of output resulting from different levels of inputs.Returns to scale are greatest at which level of output?

Accepted Answer

A)  100-200 units 
B)  200-400 units 
C)  400-600 units 
D)  There is insufficient information to answer the question. 
A)  100-200 units 
B)  200-400 units 
C)  400-600 units 
D)  There is insufficient information to answer the question.

Question 2

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 3

-The above figure shows the short-run production function for Albert's Pretzels.The marginal productivity of labor equals the average productivity of labor

Accepted Answer

A)  for all levels of labor. 
B)  at none of the levels of labor. 
C)  only for the first worker. 
D)  only for the fifth worker. 
A)  for all levels of labor. 
B)  at none of the levels of labor. 
C)  only for the first worker. 
D)  only for the fifth worker.

Question 4

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 5

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

Accepted Answer

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

Question 6

Which entity produces the greatest proportion of U.S.gross national product?

Accepted Answer

A)  government 
B)  non-profit organizations such as hospitals 
C)  firms 
D)  universities 
A)  government 
B)  non-profit organizations such as hospitals 
C)  firms 
D)  universities

Question 7

-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 8

-The above figure shows the short-run production function for Albert's Pretzels.The marginal productivity of labor for the third worker is

Accepted Answer

A)  6. 
B)  8. 
C)  24. 
D)  not known from the information provided. 
A)  6. 
B)  8. 
C)  24. 
D)  not known from the information provided.

Question 9

During the "computer revolution" of the 1980s and 1990s,many firms replaced old technology with new technology.What might explain why firms don't change technology as quickly today?

Accepted Answer

The marginal rate of technical substitut

Question 10

-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 11

The implementation of the assembly line is an example of 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 12

-The above figure shows the short-run production function for Albert's Pretzels.The average product of labor

Accepted Answer

A)  increases first and then decreases. 
B)  decreases first and then increases. 
C)  decreases throughout. 
D)  increases throughout. 
A)  increases first and then decreases. 
B)  decreases first and then increases. 
C)  decreases throughout. 
D)  increases throughout.

Question 13

Each additional worker produces two extra units of output until the first three units are produced for some production function.After the third unit is produced each additional worker produces one extra unit of output.What are the total product of labor,average product of labor and marginal product of labor for the first five units of production associated with this production function?

Accepted Answer

The answer of Each additional worker produces two extra units...

Question 14

Average productivity will fall as long as

Accepted Answer

A)  marginal productivity is falling. 
B)  it exceeds marginal productivity. 
C)  it is less than marginal productivity. 
D)  the number of workers is increasing. 
A)  marginal productivity is falling. 
B)  it exceeds marginal productivity. 
C)  it is less than marginal productivity. 
D)  the number of workers is increasing.

Question 15

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 16

-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 17

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 18

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 19

Suppose the production of mp3 players can be represented by the following production function: q = L0.4K0.4. 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 20

A production function tells the firm

Accepted Answer

A)  the maximum it can expect to produce with a given mix of inputs. 
B)  the average it can expect to produce with a given mix of inputs. 
C)  the minimum it can expect to produce with a given mix of inputs. 
D)  the average level of production for other firms in the industry. 
A)  the maximum it can expect to produce with a given mix of inputs. 
B)  the average it can expect to produce with a given mix of inputs. 
C)  the minimum it can expect to produce with a given mix of inputs. 
D)  the average level of production for other firms in the industry.

-The table in the above figure shows the levels of output resulting from different levels of inputs.Returns to scale are greatest at which level of output?

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?

-The above figure shows the short-run production function for Albert's Pretzels.The marginal productivity of labor equals the average productivity of labor

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.Increasing returns to scale are

Which entity produces the greatest proportion of U.S.gross national product?

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

-The above figure shows the short-run production function for Albert's Pretzels.The marginal productivity of labor for the third worker is

During the "computer revolution" of the 1980s and 1990s,many firms replaced old technology with new technology.What might explain why firms don't change technology as quickly today?

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

The implementation of the assembly line is an example of how

-The above figure shows the short-run production function for Albert's Pretzels.The average product of labor

Average productivity will fall as long as

Let the production function be q = AL^aK^b.The function exhibits constant returns to scale if

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

Economists typically assume that the owners of firms wish to

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

A production function tells the firm

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.Returns to scale are greatest at which level of output?

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?

-The above figure shows the short-run production function for Albert's Pretzels.The marginal productivity of labor equals the average productivity of labor

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.Increasing returns to scale are

Which entity produces the greatest proportion of U.S.gross national product?

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

-The above figure shows the short-run production function for Albert's Pretzels.The marginal productivity of labor for the third worker is

During the "computer revolution" of the 1980s and 1990s,many firms replaced old technology with new technology.What might explain why firms don't change technology as quickly today?

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

The implementation of the assembly line is an example of how

-The above figure shows the short-run production function for Albert's Pretzels.The average product of labor

Average productivity will fall as long as

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

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

Economists typically assume that the owners of firms wish to

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

A production function tells the firm

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

Let the production function be q = AL^aK^b.The function exhibits constant returns to scale if

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 TRUE?