Question 1

Isoquants that are downward-sloping straight lines exhibit

Accepted Answer

A)  an increasing marginal rate of technical substitution. 
B)  a decreasing marginal rate of technical substitution. 
C)  a constant marginal rate of technical substitution. 
D)  a marginal rate of technical substitution that cannot be determined. 
A)  an increasing marginal rate of technical substitution. 
B)  a decreasing marginal rate of technical substitution. 
C)  a constant marginal rate of technical substitution. 
D)  a marginal rate of technical substitution that cannot be determined.

Question 2

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 3

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 4

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 5

What is one of the biggest differences between a sole proprietorship and a corporation?

Accepted Answer

A)  Sole proprietorships offer stock. 
B)  Corporation shareholders elect the managers of the firm. 
C)  Sole proprietorships have limited liability. 
D)  Corporations are the only profitable firms. 
A)  Sole proprietorships offer stock. 
B)  Corporation shareholders elect the managers of the firm. 
C)  Sole proprietorships have limited liability. 
D)  Corporations are the only profitable firms.

Question 6

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 7

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

Accepted Answer

Diminishing returns to labor means that

Question 8

If marginal productivity is decreasing as more labor is hired,then average productivity must be decreasing as well.

Accepted Answer

A) True 
 B)False

Question 9

-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 10

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 11

Does this production function,q = 10L0.5K0.3,experience increasing,decreasing or constant returns to scale?

Accepted Answer

A)  Decreasing because a 100% increase in inputs increases outputs by 80%. 
B)  Increasing because an 80% increase in inputs increases outputs by 100%. 
C)  Decreasing because 0.5 + 0.3 < 1. 
D)  A and C. 
A)  Decreasing because a 100% increase in inputs increases outputs by 80%. 
B)  Increasing because an 80% increase in inputs increases outputs by 100%. 
C)  Decreasing because 0.5 + 0.3 < 1. 
D)  A and C.

Question 12

Only corporations benefit from limited liability.

Accepted Answer

A) True 
 B)False

Question 13

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 14

With respect to production,the short run is best defined as a time period

Accepted Answer

A)  lasting about six months. 
B)  lasting about two years. 
C)  in which all inputs are fixed. 
D)  in which at least one input is fixed. 
A)  lasting about six months. 
B)  lasting about two years. 
C)  in which all inputs are fixed. 
D)  in which at least one input is fixed.

Question 15

Which of the following is least likely to be considered a capital input?

Accepted Answer

A)  a sewing machine 
B)  a tractor 
C)  a telephone 
D)  a ten dollar bill 
A)  a sewing machine 
B)  a tractor 
C)  a telephone 
D)  a ten dollar bill

Question 16

-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 17

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

Isoquants that are downward-sloping straight lines exhibit

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

The slope of an isoquant tells us

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?

What is one of the biggest differences between a sole proprietorship and a corporation?

Total Product is

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

If marginal productivity is decreasing as more labor is hired,then average productivity must be decreasing as well.

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

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?

Does this production function,q = 10L^0.5K^0.3,experience increasing,decreasing or constant returns to scale?

Only corporations benefit from limited liability.

L-shaped isoquants imply that production requires that the inputs

With respect to production,the short run is best defined as a time period

Which of the following is least likely to be considered a capital input?

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

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

Isoquants that are downward-sloping straight lines exhibit

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

The slope of an isoquant tells us

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?

What is one of the biggest differences between a sole proprietorship and a corporation?

Total Product is

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

If marginal productivity is decreasing as more labor is hired,then average productivity must be decreasing as well.

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

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?

Does this production function,q = 10L0.5K0.3,experience increasing,decreasing or constant returns to scale?

Only corporations benefit from limited liability.

L-shaped isoquants imply that production requires that the inputs

With respect to production,the short run is best defined as a time period

Which of the following is least likely to be considered a capital input?

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

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

Does this production function,q = 10L^0.5K^0.3,experience increasing,decreasing or constant returns to scale?

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.