Question 1

In the long run,_____.

Accepted Answer

A) the marginal cost of each input differs by the ratio of their prices 
B) all inputs to production are fixed 
C) the marginal cost of each input equals the ratio of their prices 
D) all inputs to production are variable 
A) the marginal cost of each input differs by the ratio of their prices 
B) all inputs to production are fixed 
C) the marginal cost of each input equals the ratio of their prices 
D) all inputs to production are variable D

Question 2

If the sum of the powers associated with the inputs in a Cobb-Douglas production function exceeds 1,the production function is characterized by:

Accepted Answer

A) constant returns to scale. 
B) decreasing returns to scale. 
C) increasing returns to scale. 
D) diminishing returns to all inputs. 
A) constant returns to scale. 
B) decreasing returns to scale. 
C) increasing returns to scale. 
D) diminishing returns to all inputs. C

Question 3

Consider the following Cobb-Douglas production function,T = aLbKcEd,where T is t-shirts produced,L is labor input,K is capital,and E is energy input.Mathematically show how the returns to scale of the production function depends upon the parameters a,b,c,and d.

Accepted Answer

Assume that output and all inputs are scaled up by the same factor m.This yields mT = a(mL)^b(mK)^c(mE)^d.Simplifying,mT = a(m^bL^b)(m^cK^c)(m^dE^d)$\rarr$ mT = m^b+c+d(aL^bK^cE^d).Substituting for the original production function,we get m(aL^bK^cE^d)= m^b+c+d(aL^bK^cE^d).Thus,if the sum of the powers,b + c + d,exceeds 1,then scaling all inputs up by "m" yields more than "m" times more output.This is the definition of increasing returns to scale.It does not depend upon the parameter "a." Similarly,if the sum of the powers,b + c + d,equals 1,then scaling all inputs up by "m" yields exactly "m" times more output that is constant returns to scale.And finally,if the sum of the powers,b + c + d,is less than 1,then scaling all inputs up by "m" yields less than "m" times more output that is decreasing returns to scale.

Question 4

A carpenter hammers nails each day at work.During the first hour she can hammer 120 nails,the second hour 100 nails,the third hour 90 nails,the fourth hour 60 nails,and the fifth hour 10 nails.The total product of five hours of work is _____ nails.

Accepted Answer

A) 10 
B) 380 
C) 320 
D) 60 
A) 10 
B) 380 
C) 320 
D) 60

Question 5

A carpenter hammers nails each day at work.In each of the first three hours 50 nails were hammered and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.Diminishing returns will be experienced in the _____ hour.

Accepted Answer

A) second 
B) third 
C) fourth 
D) first 
A) second 
B) third 
C) fourth 
D) first

Question 6

What is meant by technological efficiency in production?

Accepted Answer

A) Using the latest available technology in production 
B) Producing the maximum possible output from given inputs 
C) Using the least number of inputs in production 
D) Minimizing the cost of production 
A) Using the latest available technology in production 
B) Producing the maximum possible output from given inputs 
C) Using the least number of inputs in production 
D) Minimizing the cost of production

Question 7

The slope of the total product curve measures the _____ of the input.

Accepted Answer

A) marginal product 
B) average product 
C) total product 
D) cost 
A) marginal product 
B) average product 
C) total product 
D) cost

Question 8

An isoquant map,with labor on the horizontal axis and capital on the vertical axis,has horizontal isoquants.This implies that the:

Accepted Answer

A) marginal product of capital is zero. 
B) marginal rate of substitution of capital for labor approaches infinity. 
C) marginal product of labor is zero. 
D) marginal rate of substitution of capital for labor is positive. 
A) marginal product of capital is zero. 
B) marginal rate of substitution of capital for labor approaches infinity. 
C) marginal product of labor is zero. 
D) marginal rate of substitution of capital for labor is positive.

Question 9

Economists use production functions to _____.

Accepted Answer

A) define what is technically efficient for different combinations of inputs 
B) explain the tradeoff between the use of different inputs in production 
C) maximize profits for a firm 
D) define the marginal utilities associated with the goods produced 
A) define what is technically efficient for different combinations of inputs 
B) explain the tradeoff between the use of different inputs in production 
C) maximize profits for a firm 
D) define the marginal utilities associated with the goods produced

Question 10

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-In Figure 7-2,a firm would choose to operate _____ on the total product curve.

Accepted Answer

A) between O and A 
B) at point E 
C) between B and D 
D) between D and E 
A) between O and A 
B) at point E 
C) between B and D 
D) between D and E

Question 11

The marginal rate of technical substitution equals the ratio of the _____.

Accepted Answer

A) total product of capital and labor 
B) marginal products of the inputs 
C) marginal cost of both inputs 
D) amount of capital employed to the amount of labor employed 
A) total product of capital and labor 
B) marginal products of the inputs 
C) marginal cost of both inputs 
D) amount of capital employed to the amount of labor employed

Question 12

Which of the following is constant along an isoquant?

Accepted Answer

A) Productivity of the variable input 
B) Output 
C) Cost 
D) Utility 
A) Productivity of the variable input 
B) Output 
C) Cost 
D) Utility

Question 13

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-When the quantity of labor employed lies between points D and E in Figure 7-2:

Accepted Answer

A) marginal product reaches a maximum and then declines. 
B) marginal product reaches a maximum and then becomes negative. 
C) total product is increasing at a decreasing rate. 
D) total product is decreasing. 
A) marginal product reaches a maximum and then declines. 
B) marginal product reaches a maximum and then becomes negative. 
C) total product is increasing at a decreasing rate. 
D) total product is decreasing.

Question 14

If the marginal product of a variable input is declining,then:

Accepted Answer

A) average product is also declining. 
B) total product is also declining. 
C) total product is increasing at a decreasing rate. 
D) average product is constant. 
A) average product is also declining. 
B) total product is also declining. 
C) total product is increasing at a decreasing rate. 
D) average product is constant.

Question 15

Suppose you have capital on the vertical axis and labor on the horizontal axis.The slope of the isoquant measures:

Accepted Answer

A) the marginal rate of substitution. 
B) the marginal product of labor. 
C) the marginal product of capital. 
D) the marginal rate of technical substitution of capital for labor. 
A) the marginal rate of substitution. 
B) the marginal product of labor. 
C) the marginal product of capital. 
D) the marginal rate of technical substitution of capital for labor.

Question 16

For the following total product curves [TP1 and TP2] for a firm using labor as the only variable input in production,derive the associated marginal and average product curves [AP1,AP2,MP1,MP2] and explain the key relationships.

Accepted Answer

ref SHAPE \* MERGEFORMAT There are sever

Question 17

Estimation of a production function from the linear equation Q = a + bL + cK,assumes that the law of diminishing returns _____.

Accepted Answer

A) applies to labor only 
B) applies to capital only 
C) applies to both capital and labor 
D) does not apply to either input 
A) applies to labor only 
B) applies to capital only 
C) applies to both capital and labor 
D) does not apply to either input

Question 18

A production function exhibits decreasing returns to scale when _____ increases less than proportionately to input use.

Accepted Answer

A) cost per unit 
B) average product 
C) marginal product 
D) total product 
A) cost per unit 
B) average product 
C) marginal product 
D) total product

Question 19

Table 7-2 shows the combinations of labor and capital that are used to produce various levels of output.
Table 7-2 $$\begin{array} { | c | c | c | c | } 
\hline \text { Units of capital } & \text { Units of labor } & \text { Total Product } & \text { Marginal product of labor } \
\hline 2 & 0 & 0 & - \
\hline 2 & 1 & 20 & 20 \
\hline 2 & 2 & 44 & 24 \
\hline 2 & 3 & 68 & 24 \
\hline 2 & 4 & 90 & 22 \
\hline 2 & 5 & 78 & - 12 \
\hline
\end{array}$$
-Refer to Table 7-2.A rational producer would never operate with _____ units of labor and 2 units of capital.

Accepted Answer

A) 2 
B) 1 
C) 5 
D) 4 
A) 2 
B) 1 
C) 5 
D) 4

Question 20

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-Refer to Figure 7-2.Which of the following is true when the labor input is between points C and D?

Accepted Answer

A) marginal product reaches a maximum and then declines. 
B) marginal product reaches a maximum and then becomes negative. 
C) average product is equal at point B and C. 
D) total product is increasing at a decreasing rate. 
A) marginal product reaches a maximum and then declines. 
B) marginal product reaches a maximum and then becomes negative. 
C) average product is equal at point B and C. 
D) total product is increasing at a decreasing rate.

In the long run,_____.

If the sum of the powers associated with the inputs in a Cobb-Douglas production function exceeds 1,the production function is characterized by:

Consider the following Cobb-Douglas production function,T = aL^bK^cE^d,where T is t-shirts produced,L is labor input,K is capital,and E is energy input.Mathematically show how the returns to scale of the production function depends upon the parameters a,b,c,and d.

A carpenter hammers nails each day at work.During the first hour she can hammer 120 nails,the second hour 100 nails,the third hour 90 nails,the fourth hour 60 nails,and the fifth hour 10 nails.The total product of five hours of work is _____ nails.

A carpenter hammers nails each day at work.In each of the first three hours 50 nails were hammered and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.Diminishing returns will be experienced in the _____ hour.

What is meant by technological efficiency in production?

The slope of the total product curve measures the _____ of the input.

An isoquant map,with labor on the horizontal axis and capital on the vertical axis,has horizontal isoquants.This implies that the:

Economists use production functions to _____.

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -In Figure 7-2,a firm would choose to operate _____ on the total product curve.

The marginal rate of technical substitution equals the ratio of the _____.

Which of the following is constant along an isoquant?

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -When the quantity of labor employed lies between points D and E in Figure 7-2:

If the marginal product of a variable input is declining,then:

Suppose you have capital on the vertical axis and labor on the horizontal axis.The slope of the isoquant measures:

For the following total product curves [TP₁ and TP₂] for a firm using labor as the only variable input in production,derive the associated marginal and average product curves [AP₁,AP₂,MP₁,MP₂] and explain the key relationships.

Estimation of a production function from the linear equation Q = a + bL + cK,assumes that the law of diminishing returns _____.

A production function exhibits decreasing returns to scale when _____ increases less than proportionately to input use.

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -Refer to Figure 7-2.Which of the following is true when the labor input is between points C and D?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 7: Production

In the long run,_____.

If the sum of the powers associated with the inputs in a Cobb-Douglas production function exceeds 1,the production function is characterized by:

Consider the following Cobb-Douglas production function,T = aLbKcEd,where T is t-shirts produced,L is labor input,K is capital,and E is energy input.Mathematically show how the returns to scale of the production function depends upon the parameters a,b,c,and d.

A carpenter hammers nails each day at work.During the first hour she can hammer 120 nails,the second hour 100 nails,the third hour 90 nails,the fourth hour 60 nails,and the fifth hour 10 nails.The total product of five hours of work is _____ nails.

A carpenter hammers nails each day at work.In each of the first three hours 50 nails were hammered and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.Diminishing returns will be experienced in the _____ hour.

What is meant by technological efficiency in production?

The slope of the total product curve measures the _____ of the input.

An isoquant map,with labor on the horizontal axis and capital on the vertical axis,has horizontal isoquants.This implies that the:

Economists use production functions to _____.

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -In Figure 7-2,a firm would choose to operate _____ on the total product curve.

The marginal rate of technical substitution equals the ratio of the _____.

Which of the following is constant along an isoquant?

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -When the quantity of labor employed lies between points D and E in Figure 7-2:

If the marginal product of a variable input is declining,then:

Suppose you have capital on the vertical axis and labor on the horizontal axis.The slope of the isoquant measures:

For the following total product curves [TP1 and TP2] for a firm using labor as the only variable input in production,derive the associated marginal and average product curves [AP1,AP2,MP1,MP2] and explain the key relationships.

Estimation of a production function from the linear equation Q = a + bL + cK,assumes that the law of diminishing returns _____.

A production function exhibits decreasing returns to scale when _____ increases less than proportionately to input use.

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -Refer to Figure 7-2.Which of the following is true when the labor input is between points C and D?

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Consider the following Cobb-Douglas production function,T = aL^bK^cE^d,where T is t-shirts produced,L is labor input,K is capital,and E is energy input.Mathematically show how the returns to scale of the production function depends upon the parameters a,b,c,and d.

For the following total product curves [TP₁ and TP₂] for a firm using labor as the only variable input in production,derive the associated marginal and average product curves [AP₁,AP₂,MP₁,MP₂] and explain the key relationships.