Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Let the production function be q = ALaKb.Returns to scale are equal to

Accepted Answer

A) a ∗ b. 
B) a + b. 
C) La + Kb. 
D) A ∗ L. 
A) a ∗ b. 
B) a + b. 
C) La + Kb. 
D) A ∗ L.

Question 3

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

Accepted Answer

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

Question 4

For De Beers,the diamond company,diamond mines are ________ for their production.

Accepted Answer

A) capital services 
B) labor services 
C) materials 
D) None of above. 
A) capital services 
B) labor services 
C) materials 
D) None of above.

Question 5

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 6

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 7

-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 8

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 9

If inputs into production cannot be substituted for each other but have to be employed in fixed proportions,isoquants are straight,downward-sloping lines.

Accepted Answer

A) True 
 B)False

Question 10

The marginal product of labor 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 11

Joey cuts grass during the summer.He owns one lawn mower.For him,the short run is equal to

Accepted Answer

A) the amount of time it takes to acquire more customers. 
B) the amount of time it takes to hire an additional employee. 
C) the amount of time it takes to hire an additional employee and buy another lawn mower. 
D) the amount of time it takes to mow one lawn. 
A) the amount of time it takes to acquire more customers. 
B) the amount of time it takes to hire an additional employee. 
C) the amount of time it takes to hire an additional employee and buy another lawn mower. 
D) the amount of time it takes to mow one lawn.

Question 12

Suppose that additional units of capital affect the marginal productivity of labor.This is not unrealistic.Word processors increase the marginal productivity of secretaries.On the other hand,robotic equipment can completely replace a worker and,thereby,lower the marginal productivity of labor.Given this possibility,determine the conditions under which isoquants will not be convex (i.e. ,concave).

Accepted Answer

The slope of the isoquant equals -MP_L/MP_K.

Question 13

To say that isoquants are convex is to say that

Accepted Answer

A) the marginal rate of technical substitution falls as labor increases. 
B) capital and labor are perfect substitutes. 
C) labor,but not capital,is subject to the law of diminishing marginal returns. 
D) there are constant returns to scale. 
A) the marginal rate of technical substitution falls as labor increases. 
B) capital and labor are perfect substitutes. 
C) labor,but not capital,is subject to the law of diminishing marginal returns. 
D) there are constant returns to scale.

Question 14

Suppose the production of VCRs can be represented by the following production function:
Q = L0.4 K0.4.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 15

Justin's bank employs tellers and ATMs.Both are able to serve clients in the exact same way and therefore are perfect substitutes.Describe the elasticity of substitution between the two inputs.

Accepted Answer

The elasticity is infinite.The

Question 16

Lectures in microeconomics can be delivered either by an instructor (labor)or a movie (capital)or any combination of both.Each minute of the instructor's time delivers the same amount of information as a minute of the movie.Which graph in the above figure best represents the isoquants for lectures in microeconomics when Capital per day is on the vertical axis and Labor per day is on the horizontal axis?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D 
A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D

Question 17

Unlike indifference curves,isoquants can intersect.

Accepted Answer

A) True 
 B)False

Question 18

Describe the relationship between marginal productivity and average productivity.Use calculus or a graph to support your answer.

Accepted Answer

AP = Q(L)/L.dAP/dL = ([L ∗ MP]

Question 19

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

Accepted Answer

Diminishing returns to labor means that

Question 20

The steeper an isoquant is,

Accepted Answer

A) the greater is the marginal productivity of labor relative to that of capital. 
B) the greater is the substitutability between capital and labor. 
C) the greater is the need to keep capital and labor in fixed proportions. 
D) the greater is the level of output. 
A) the greater is the marginal productivity of labor relative to that of capital. 
B) the greater is the substitutability between capital and labor. 
C) the greater is the need to keep capital and labor in fixed proportions. 
D) the greater is the level of output.

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

Let the production function be q = AL^aK^b.Returns to scale are equal to

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

For De Beers,the diamond company,diamond mines are ________ for their production.

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

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

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

Isoquants that are downward-sloping straight lines exhibit

If inputs into production cannot be substituted for each other but have to be employed in fixed proportions,isoquants are straight,downward-sloping lines.

The marginal product of labor is

Joey cuts grass during the summer.He owns one lawn mower.For him,the short run is equal to

To say that isoquants are convex is to say that

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

Justin's bank employs tellers and ATMs.Both are able to serve clients in the exact same way and therefore are perfect substitutes.Describe the elasticity of substitution between the two inputs.

Unlike indifference curves,isoquants can intersect.

Describe the relationship between marginal productivity and average productivity.Use calculus or a graph to support your answer.

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

The steeper an isoquant is,

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 6: Firms and Production

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

Let the production function be q = ALaKb.Returns to scale are equal to

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

For De Beers,the diamond company,diamond mines are ________ for their production.

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

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

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

Isoquants that are downward-sloping straight lines exhibit

If inputs into production cannot be substituted for each other but have to be employed in fixed proportions,isoquants are straight,downward-sloping lines.

The marginal product of labor is

Joey cuts grass during the summer.He owns one lawn mower.For him,the short run is equal to

To say that isoquants are convex is to say that

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

Justin's bank employs tellers and ATMs.Both are able to serve clients in the exact same way and therefore are perfect substitutes.Describe the elasticity of substitution between the two inputs.

Unlike indifference curves,isoquants can intersect.

Describe the relationship between marginal productivity and average productivity.Use calculus or a graph to support your answer.

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

The steeper an isoquant is,

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Let the production function be q = AL^aK^b.Returns to scale are equal to

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