Exam 6: Firms and Production

Mr.Roche purchases a firm that produces widgets by employing machines and workers.Each machine requires exactly three workers to operate.Without three workers,the machine will not work,and any additional worker above three will just stand there doing nothing.When operated this way,the machine produces 30 widgets an hour.Draw some isoquants for this technology and determine the production function.

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

Dell computers has increased production efficiency by

Which graph in the above figure represents the isoquants where,as the amount of labor used increases and the amount of capital used decreases,the marginal product of labor rises when Capital per day is on the vertical axis and Labor per day is on the horizontal axis?

Changing how production is organized cannot result in changes in productivity.

Average productivity will fall as long as

Suppose the production of paved roadways can be represented as q = L^0.5 + K^0.5.Which of the following statements is (are)TRUE?

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

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

Provide a graph and an explanation to show that the production function Q = L^0.5 K^0.5 has diminishing marginal product of labor but has constant returns to scale.

Limited liability is a benefit to

Cobb-Douglas production functions can never possess varying returns to scale.

L-shaped isoquants imply that production requires that the inputs

Which situation is most likely to exhibit diminishing marginal returns to labor?

Only corporations benefit from limited liability.

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

Show that increasing returns to scale can co-exist with diminishing marginal productivity.To do so,provide an example of a production function with IRTS and diminishing marginal returns.

A small firm in Indonesia has the following estimated production function: ln(q)= 10 + 2.6ln(L)- 0.4(ln(L))² Derive the firm's marginal and average product of labor as functions of q and L.What is the elasticity of output with respect to labor?

Albert's Pretzel Baking Company used to have four workers who were each in charge of making their own pretzels from start to finish.Now,one worker mixes the dough,another shapes it,the third puts the unbaked pretzels into the oven and the fourth removes the finished product.Output has doubled.This is an example of

At Joey's Lawncutting Service,the production function is represented as: q = min(m,l),where q is the quantity of lawns mowed.The inputs are m,the lawn mower,and l,the laborer.Which graph in the above figure best represents the isoquants for Joey's Lawncutting Service when Capital per day is on the vertical axis and Labor per day is on the horizontal axis?