Question 1

The isoquants are normally drawn with a convex shape because inputs are

Accepted Answer

A) not perfectly substitutable. 
B) perfectly substitutable. 
C) perfect complements. 
D) normal goods. 
A) not perfectly substitutable. 
B) perfectly substitutable. 
C) perfect complements. 
D) normal goods.

Question 2

The change in total output attributable to the last unit of an input is the:

Accepted Answer

A) Total product. 
B) Average product. 
C) Marginal product. 
D) Marginal return. 
A) Total product. 
B) Average product. 
C) Marginal product. 
D) Marginal return.

Question 3

A production function

Accepted Answer

A) defines the minimum amount of output that can be produced with inputs such as capital and labor. 
B) defines the average amount of output that can be produced with inputs such as capital and labor. 
C) represents the technology available for turning inputs into output. 
D) is determined only by the expenditures on R&D. 
A) defines the minimum amount of output that can be produced with inputs such as capital and labor. 
B) defines the average amount of output that can be produced with inputs such as capital and labor. 
C) represents the technology available for turning inputs into output. 
D) is determined only by the expenditures on R&D.

Question 4

With a linear production function there is a

Accepted Answer

A) perfect complementary relationship between all inputs. 
B) perfect substitutable relationship between all inputs. 
C) fixed-proportions relationship between all inputs. 
D) variable-proportions relationship between all inputs. 
A) perfect complementary relationship between all inputs. 
B) perfect substitutable relationship between all inputs. 
C) fixed-proportions relationship between all inputs. 
D) variable-proportions relationship between all inputs.

Question 5

Suppose the production function of automobiles is given by

Accepted Answer

@#IMG-DLM& a.Show that the marginal product of any

Question 6

Suppose the w = $20 and r = $30.The isocost line for a firm in this industry is

Accepted Answer

A) C = 20K + 30L. 
B) K = 0.33C - 0.66L. 
C) 1.5L + K = 0.5C. 
D) Depends entirely on the functional form of the production function. 
A) C = 20K + 30L. 
B) K = 0.33C - 0.66L. 
C) 1.5L + K = 0.5C. 
D) Depends entirely on the functional form of the production function.

Question 7

The combinations of inputs that produce a given level of output are depicted by:

Accepted Answer

A) Indifference curves. 
B) Budget lines. 
C) Isocost curves. 
D) Isoquants. 
A) Indifference curves. 
B) Budget lines. 
C) Isocost curves. 
D) Isoquants.

Question 8

To open a new business, a manager must obtain a license from the city for $20,000.The license is transferable, but only $3,000 is refundable in the event the firm does not use the license.
a.What are the firm's fixed costs? Sunk costs?
b.Suppose the manager obtains a license but then decides against opening the business.If another firm offers the manager $2,000 for the license, should the manager accept the offer?

Accepted Answer

a.Fixed costs are $20,000.Sunk costs are

Question 9

The total costs for Morris Industries are summarized in the following table.Based on this information, fill in the missing entries in the table for fixed cost, variable cost, average fixed cost, average variable cost, average total cost, and marginal cost.

Accepted Answer

The answer of The total costs for Morris Industries are...

Question 10

Which of the following profit functions exhibits a Leontief production function?

Accepted Answer

A) $\pi$  = P x K0.75L0.50 - 20L - 35K. 
B) $\pi$ = P x min(2L, 5K) - 20L - 35K. 
C) $\pi$  = P x (3K + 4L) - 20L - 35K. 
D) $\pi$  = P x (3K0.5 + 4L0.5)1/0.2 - 20L - 35K. 
A) $\pi$  = P x K0.75L0.50 - 20L - 35K. 
B) $\pi$ = P x min(2L, 5K) - 20L - 35K. 
C) $\pi$  = P x (3K + 4L) - 20L - 35K. 
D) $\pi$  = P x (3K0.5 + 4L0.5)1/0.2 - 20L - 35K.

Question 11

Two firms producing identical products may merge due to the existence of:

Accepted Answer

A) Economies of scope. 
B) Economies of scale. 
C) Cost complementarities. 
D) All of the statements associated with this question are correct. 
A) Economies of scope. 
B) Economies of scale. 
C) Cost complementarities. 
D) All of the statements associated with this question are correct.

Question 12

Cost complementary exits in a multiproduct cost function when

Accepted Answer

A) the average cost of producing one output is reduced when the output of another product is increased. 
B) the average cost of producing one output is increased when the output of another product is increased. 
C) the marginal cost of producing one output is increased when the output of another product is decreased. 
D) the marginal cost of producing one output is reduced when the output of another product is increased. 
A) the average cost of producing one output is reduced when the output of another product is increased. 
B) the average cost of producing one output is increased when the output of another product is increased. 
C) the marginal cost of producing one output is increased when the output of another product is decreased. 
D) the marginal cost of producing one output is reduced when the output of another product is increased.

Question 13

Isoquants are normally drawn with a convex shape because:

Accepted Answer

A) Inputs are perfectly substitutable. 
B) Inputs are perfectly complementary. 
C) Inputs are not perfectly substitutable. 
D) Inputs are not perfectly complementary. 
A) Inputs are perfectly substitutable. 
B) Inputs are perfectly complementary. 
C) Inputs are not perfectly substitutable. 
D) Inputs are not perfectly complementary.

Question 14

Suppose the production function is given by Q = 4K + 6L.What is the average product of capital when 10 units of capital and 5 units of labor are employed?

Accepted Answer

A) 14. 
B) 10. 
C) 7. 
D) 5. 
A) 14. 
B) 10. 
C) 7. 
D) 5.

Question 15

Suppose the production function is given by Q = min {K, L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

Accepted Answer

A) 0. 
B) 4. 
C) 9. 
D) 13. 
A) 0. 
B) 4. 
C) 9. 
D) 13.

Question 16

Suppose the cost function is C(Q) = 50 + Q - 10Q2 + 2Q3.What is the marginal cost of producing 10 units?

Accepted Answer

A) $401. 
B) $1,060. 
C) $560. 
D) $1,010. 
A) $401. 
B) $1,060. 
C) $560. 
D) $1,010.

Question 17

Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run.If the per-unit rental rate of capital, r, is $25 and the per-unit wage, w, is $15, then the fixed cost of using 81 units of capital and 9 units of labor is

Accepted Answer

A) $2,160. 
B) $2,025. 
C) $135. 
D) there is insufficient information to determine the fixed costs. 
A) $2,160. 
B) $2,025. 
C) $135. 
D) there is insufficient information to determine the fixed costs.

Question 18

Given the Leontief production function Q = min{5.5K, 6.7L}, how much output is produced when K = 40 and L = 35?

Accepted Answer

A) 220. 
B) 234.5. 
C) 192.5. 
D) 268. 
A) 220. 
B) 234.5. 
C) 192.5. 
D) 268.

Question 19

For the cost function C(Q) = 100 + 2Q + 3Q2, the total variable cost of producing 2 units of output is

Accepted Answer

A) 16. 
B) 12. 
C) 4. 
D) none of the statements associated with this question are correct. 
A) 16. 
B) 12. 
C) 4. 
D) none of the statements associated with this question are correct.

Question 20

The maker of Turbotax produces software that prepares federal income tax returns.In addition, it produces software that prepares various state income tax returns.Why doesn't it pay for the firm to specialize in federal software?

Accepted Answer

There are cost complementarities and eco

The isoquants are normally drawn with a convex shape because inputs are

The change in total output attributable to the last unit of an input is the:

A production function

With a linear production function there is a

Suppose the production function of automobiles is given by

Suppose the w = $20 and r = $30.The isocost line for a firm in this industry is

The combinations of inputs that produce a given level of output are depicted by:

The total costs for Morris Industries are summarized in the following table.Based on this information, fill in the missing entries in the table for fixed cost, variable cost, average fixed cost, average variable cost, average total cost, and marginal cost.

Which of the following profit functions exhibits a Leontief production function?

Two firms producing identical products may merge due to the existence of:

Cost complementary exits in a multiproduct cost function when

Isoquants are normally drawn with a convex shape because:

Suppose the production function is given by Q = 4K + 6L.What is the average product of capital when 10 units of capital and 5 units of labor are employed?

Suppose the production function is given by Q = min {K, L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

Suppose the cost function is C(Q) = 50 + Q - 10Q² + 2Q³.What is the marginal cost of producing 10 units?

Given the Leontief production function Q = min{5.5K, 6.7L}, how much output is produced when K = 40 and L = 35?

For the cost function C(Q) = 100 + 2Q + 3Q², the total variable cost of producing 2 units of output is

The maker of Turbotax produces software that prepares federal income tax returns.In addition, it produces software that prepares various state income tax returns.Why doesn't it pay for the firm to specialize in federal software?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 5: The Production Process and Costs

The isoquants are normally drawn with a convex shape because inputs are

The change in total output attributable to the last unit of an input is the:

A production function

With a linear production function there is a

Suppose the production function of automobiles is given by

Suppose the w = $20 and r = $30.The isocost line for a firm in this industry is

The combinations of inputs that produce a given level of output are depicted by:

The total costs for Morris Industries are summarized in the following table.Based on this information, fill in the missing entries in the table for fixed cost, variable cost, average fixed cost, average variable cost, average total cost, and marginal cost.

Which of the following profit functions exhibits a Leontief production function?

Two firms producing identical products may merge due to the existence of:

Cost complementary exits in a multiproduct cost function when

Isoquants are normally drawn with a convex shape because:

Suppose the production function is given by Q = 4K + 6L.What is the average product of capital when 10 units of capital and 5 units of labor are employed?

Suppose the production function is given by Q = min {K, L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

Suppose the cost function is C(Q) = 50 + Q - 10Q2 + 2Q3.What is the marginal cost of producing 10 units?

Given the Leontief production function Q = min{5.5K, 6.7L}, how much output is produced when K = 40 and L = 35?

For the cost function C(Q) = 100 + 2Q + 3Q2, the total variable cost of producing 2 units of output is

The maker of Turbotax produces software that prepares federal income tax returns.In addition, it produces software that prepares various state income tax returns.Why doesn't it pay for the firm to specialize in federal software?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Suppose the cost function is C(Q) = 50 + Q - 10Q² + 2Q³.What is the marginal cost of producing 10 units?

For the cost function C(Q) = 100 + 2Q + 3Q², the total variable cost of producing 2 units of output is