Question 1

The economist's distinction between the long run and the short run captures the idea that quantities of some factor inputs can be varied in the short run but not in the long run.

Accepted Answer

A) True 
 B)False  True

Question 2

The production set of a firm is the set of all products the firm can produce.

Accepted Answer

A) True 
 B)False  False

Question 3

The production function f(x, y) =   +   has increasing returns to scale.

Accepted Answer

A) True 
 B)False  False

Question 4

A firm has the production function f(X, Y) =   , where X is the amount of factor x used and Y is the amount of factor y used. On a diagram we put X on the horizontal axis and Y on the vertical axis. We draw some isoquants. Now we draw a straight line on the graph and we notice that wherever this line meets an isoquant, the isoquant has a slope of -9. The straight line we drew

Accepted Answer

A)  is a ray through the origin with slope 3. 
B)  is a ray through the origin with slope 4. 
C)  is vertical. 
D)  is horizontal. 
E)  has a negative slope. 
A)  is a ray through the origin with slope 3. 
B)  is a ray through the origin with slope 4. 
C)  is vertical. 
D)  is horizontal. 
E)  has a negative slope.

Question 5

A firm has the production function f(x, y) = x.5 + y, where x is the amount of factor x it uses and y is the amount of factor y. On a diagram we put x on the horizontal axis and y on the vertical axis. We draw some isoquants. Now we draw a straight line on the graph and we notice that the slopes of all the isoquants that it meets have the same slope at the point where they meet this line. The straight line we drew was

Accepted Answer

A)  vertical. 
B)  horizontal. 
C)  diagonal through the origin with slope 0.5. 
D)  diagonal with slope 2. 
E)  diagonal with slope greater than 2. 
A)  vertical. 
B)  horizontal. 
C)  diagonal through the origin with slope 0.5. 
D)  diagonal with slope 2. 
E)  diagonal with slope greater than 2.

Question 6

A firm has the production function f(x, y) =   . The slope of the firm's isoquant at the point (x, y) = (50, 70) is (pick the closest one)

Accepted Answer

A)  -1.50. 
B)  -0.67. 
C)  -0.71. 
D)  -2.10. 
E)  -0.36. 
A)  -1.50. 
B)  -0.67. 
C)  -0.71. 
D)  -2.10. 
E)  -0.36.

Question 7

A firm has the production function f(x, y) = x0.90y0.80. This firm has

Accepted Answer

A)  constant returns to scale. 
B)  decreasing returns to scale and diminishing marginal products for factor x. 
C)  decreasing returns to scale and increasing marginal product for factor x. 
D)  increasing returns to scale and decreasing marginal product of factor x. 
E)  None of the above. 
A)  constant returns to scale. 
B)  decreasing returns to scale and diminishing marginal products for factor x. 
C)  decreasing returns to scale and increasing marginal product for factor x. 
D)  increasing returns to scale and decreasing marginal product of factor x. 
E)  None of the above.

Question 8

In any production process, the marginal product of labor equals

Accepted Answer

A)  the value of total output minus the cost of the fixed capital stock. 
B)  the change in output per unit change in labor input for "small" changes in the amount of input. 
C)  total output divided by total labor inputs. 
D)  total output produced with the given labor inputs. 
E)  the average output of the least-skilled workers employed by the firm. 
A)  the value of total output minus the cost of the fixed capital stock. 
B)  the change in output per unit change in labor input for "small" changes in the amount of input. 
C)  total output divided by total labor inputs. 
D)  total output produced with the given labor inputs. 
E)  the average output of the least-skilled workers employed by the firm.

Question 9

A firm has the production function f(x, y) =   . The slope of the firm's isoquant at the point (x, y) = (20, 40) is (pick the closest one)

Accepted Answer

A)  -3. 
B)  -0.67. 
C)  -1.50. 
D)  -0.50. 
E)  -0.25. 
A)  -3. 
B)  -0.67. 
C)  -1.50. 
D)  -0.50. 
E)  -0.25.

Question 10

A firm has the production function f(x, y) = x + min{x, y}. The isoquants for the firm

Accepted Answer

A)  are L-shaped with the corners of the L's on the line y = x. 
B)  are L-shaped with the corners of the L's on the line y = x + 1. 
C)  consist of two line segments, one vertical and the other with a slope of -1. 
D)  consist of two line segments, one horizontal and the other with a slope of -1. 
E)  are upside down L-shaped. 
A)  are L-shaped with the corners of the L's on the line y = x. 
B)  are L-shaped with the corners of the L's on the line y = x + 1. 
C)  consist of two line segments, one vertical and the other with a slope of -1. 
D)  consist of two line segments, one horizontal and the other with a slope of -1. 
E)  are upside down L-shaped.

Question 11

A production isoquant is a locus of combinations of inputs that are equally profitable.

Accepted Answer

A) True 
 B)False

Question 12

If there are constant returns to scale, then doubling the amount of any input will exactly double the amount of output.

Accepted Answer

A) True 
 B)False

Question 13

If the production function is f(x, y) = min{ 12x, 3y}, then there is convexity in production.

Accepted Answer

A) True 
 B)False

Question 14

If the production function is f(x1, x2) = x1x2, then there are constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 15

The production function Q = 50K0.25L0.25 exhibits

Accepted Answer

A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  decreasing returns to scale. 
D)  increasing, then diminishing returns to scale. 
E)  negative returns to scale. 
A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  decreasing returns to scale. 
D)  increasing, then diminishing returns to scale. 
E)  negative returns to scale.

Question 16

If a firm moves from one point on a production isoquant to another point on the same isoquant, which of the following will certainly not happen?

Accepted Answer

A)  A change in the level of output 
B)  A change in the ratio in which the inputs are combined 
C)  A change in the marginal products of the inputs 
D)  A change in the rate of technical substitution 
E)  A change in profitability 
A)  A change in the level of output 
B)  A change in the ratio in which the inputs are combined 
C)  A change in the marginal products of the inputs 
D)  A change in the rate of technical substitution 
E)  A change in profitability

Question 17

A firm has the production function f(x, y) =   . The slope of the firm's isoquant at the point (x, y) = (40, 80) is (pick the closest one)

Accepted Answer

A)  -0.50. 
B)  -4. 
C)  -0.25. 
D)  -8. 
E)  -0.25 
A)  -0.50. 
B)  -4. 
C)  -0.25. 
D)  -8. 
E)  -0.25

Question 18

A firm has a production function f(x, y) = 1.80(x0.80 + y0.80)2 whenever x > 0 and y > 0. When the amounts of both inputs are positive, this firm has

Accepted Answer

A)  decreasing returns to scale. 
B)  constant returns to scale. 
C)  increasing returns to scale if x + y > 1 and decreasing returns to scale otherwise. 
D)  increasing returns to scale. 
E)  increasing returns to scale if output is less than 1 and decreasing returns to scale if output is greater than 1. 
A)  decreasing returns to scale. 
B)  constant returns to scale. 
C)  increasing returns to scale if x + y > 1 and decreasing returns to scale otherwise. 
D)  increasing returns to scale. 
E)  increasing returns to scale if output is less than 1 and decreasing returns to scale if output is greater than 1.

Question 19

A firm has the production function f(x1, x2) = x0.801x0.202. The isoquant on which output is   has the equation

Accepted Answer

A)  x2 = 70x51. 
B)  = 4. 
C)  x2 = 70x-41. 
D)  x2 = 70x-0.201. 
E)  x1 = 0.20x-0.802. 
A)  x2 = 70x51. 
B)  = 4. 
C)  x2 = 70x-41. 
D)  x2 = 70x-0.201. 
E)  x1 = 0.20x-0.802.

Question 20

If output is produced with two factors of production and with increasing returns to scale,

Accepted Answer

A)  there cannot be diminishing marginal rate of substitution. 
B)  all inputs must have increasing marginal products. 
C)  on a graph of production isoquants, moving along a ray from the origin, output more than doubles as the distance from the origin doubles. 
D)  the marginal product of at least one input must be increasing. 
E)  all inputs must have decreasing marginal products. 
A)  there cannot be diminishing marginal rate of substitution. 
B)  all inputs must have increasing marginal products. 
C)  on a graph of production isoquants, moving along a ray from the origin, output more than doubles as the distance from the origin doubles. 
D)  the marginal product of at least one input must be increasing. 
E)  all inputs must have decreasing marginal products.

Exam 17: Technology

The economist's distinction between the long run and the short run captures the idea that quantities of some factor inputs can be varied in the short run but not in the long run.

The production set of a firm is the set of all products the firm can produce.

The production function f(x, y) = + has increasing returns to scale.

A firm has the production function f(x, y) = . The slope of the firm's isoquant at the point (x, y) = (50, 70) is (pick the closest one)

A firm has the production function f(x, y) = x0.90y0.80. This firm has

In any production process, the marginal product of labor equals

A firm has the production function f(x, y) = . The slope of the firm's isoquant at the point (x, y) = (20, 40) is (pick the closest one)

A firm has the production function f(x, y) = x + min{x, y}. The isoquants for the firm

A production isoquant is a locus of combinations of inputs that are equally profitable.

If there are constant returns to scale, then doubling the amount of any input will exactly double the amount of output.

If the production function is f(x, y) = min{ 12x, 3y}, then there is convexity in production.

If the production function is f(x1, x2) = x1x2, then there are constant returns to scale.

The production function Q = 50K0.25L0.25 exhibits

If a firm moves from one point on a production isoquant to another point on the same isoquant, which of the following will certainly not happen?

A firm has the production function f(x, y) = . The slope of the firm's isoquant at the point (x, y) = (40, 80) is (pick the closest one)

A firm has a production function f(x, y) = 1.80(x0.80 + y0.80)2 whenever x > 0 and y > 0. When the amounts of both inputs are positive, this firm has

A firm has the production function f(x1, x2) = x0.801x0.202. The isoquant on which output is has the equation

If output is produced with two factors of production and with increasing returns to scale,

Budget Constraint

A: Budget Constraint

Preferences

A: Preferences

Utility

A: Utility

Choice

A: Choice

Demand

A: Demand

Revealed Preference

A: Revealed Preference

Slutsky Equation

A: Slutsky Equation

Buying and Selling

A: Buying and Selling

Intertemporal Choice

A: Intertemporal Choice

Asset Markets

A: Asset Markets

Uncertainty

A: Uncertainty

Risky Assets

A: Risky Assets

Consumers Surplus

A: Consumers Surplus

Market Demand

A: Market Demand

Equilibrium

A: Equilibrium

Auctions

A: Auctions

A: Technology

Profit Maximization

A: Profit Maximization

Cost Minimization

A: Cost Minimization

Cost Curves

A: Cost Curves

Firm Supply

A: Firm Supply

Industry Supply

A: Industry Supply

Monopoly

A: Monopoly

Monopoly Behavior

A: Monopoly Behavior

Factor Markets

A: Factor Markets

Oligopoly

A: Oligopoly

Game Theory

A: Game Theory

Game Applications

A: Game Applications

Behavioral Economics

Exchange

A: Exchange

Production

A: Production

Welfare

A firm has the production function f(x, y) = x^0.90y^0.80. This firm has

If the production function is f(x₁, x₂) = x₁x₂, then there are constant returns to scale.

The production function Q = 50K^0.25L^0.25 exhibits

A firm has a production function f(x, y) = 1.80(x^0.80 + y^0.80)2 whenever x > 0 and y > 0. When the amounts of both inputs are positive, this firm has

A firm has the production function f(x₁, x₂) = x^0.80₁x^0.20₂. The isoquant on which output is has the equation