Question 1

Suppose that at a point on an isoquant,the following information is true: MPL = 3 and MPK = 2.Then if K falls by 5,L must increase by:

Accepted Answer

A) 0.30. 
B) 0.67. 
C) 3.33. 
D) 1.50. 
A) 0.30. 
B) 0.67. 
C) 3.33. 
D) 1.50.

Question 2

Table 7-3 shows the combinations of labor and capital required to produce various level of output.
Table 7-3  
-Refer to Table 7-3.Assume that capital remains fixed while labor is the only variable input used in production.If the firm is currently producing 26 units of output using three units of labor,what is the marginal product of labor at this point?

Accepted Answer

A) 2 
B) 4 
C) 6 
D) 8 
A) 2 
B) 4 
C) 6 
D) 8

Question 3

Which of the following statements about the marginal rate of technical substitution is correct?

Accepted Answer

A) The MRTS is equal to the ratio of the marginal productivities of the inputs. 
B) The MRTS is equal to the slope of the total product curve. 
C) The MRTS is zero in the long run. 
D) The MRTS is the rate at which one input can be substituted for the other in production while varying the level of output. 
A) The MRTS is equal to the ratio of the marginal productivities of the inputs. 
B) The MRTS is equal to the slope of the total product curve. 
C) The MRTS is zero in the long run. 
D) The MRTS is the rate at which one input can be substituted for the other in production while varying the level of output.

Question 4

Define and then derive the expression for the marginal rate of technical substitution.

Accepted Answer

@#IMG-DLM& The marginal rate of technical substitu

Question 5

Returns to scale can be evaluated by looking at how output changes along _____.

Accepted Answer

A) a ray from the origin 
B) the points of intersection of two or more isoquants 
C) the horizontal axis 
D) an isoquant. 
A) a ray from the origin 
B) the points of intersection of two or more isoquants 
C) the horizontal axis 
D) an isoquant.

Question 6

Isoquants that are farther away from the origin indicate:

Accepted Answer

A) lower cost combinations of inputs. 
B) technologically inefficient levels of output. 
C) higher levels of output. 
D) combinations of inputs that are less preferred. 
A) lower cost combinations of inputs. 
B) technologically inefficient levels of output. 
C) higher levels of output. 
D) combinations of inputs that are less preferred.

Question 7

Table 7-4 shows the shows the quantities of labor and capital required to produce various levels of output.
Table 7-4 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Capital }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { of Labor }
\end{array} & \text { Output } \
\hline 6 & 2 & 40 \
\hline 12 & 4 & 100 \
\hline 24 & 8 & 220 \
\hline 48 & 16 & 440 \
\hline 96 & 32 & 800 \
\hline
\end{array}$$
-Refer to Table 7-4.When the firm increases production from 24 units of capital and 8 units of labor to 48 units of capital and 16 units of labor,the production function exhibits:

Accepted Answer

A) decreasing marginal rate of technical substitution. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) diminishing marginal returns 
A) decreasing marginal rate of technical substitution. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) diminishing marginal returns

Question 8

Table 7-3 shows the combinations of labor and capital required to produce various level of output.
Table 7-3  
-Refer to Table 7-3.If the firm is currently producing 26 units of output using three units of labor,what is the marginal rate of technical substitution of labor for capital at this point?

Accepted Answer

A) -1 
B) -2 
C) -3 
D) -4 
A) -1 
B) -2 
C) -3 
D) -4

Question 9

Which of the following represents a Cobb-Douglas production function?

Accepted Answer

A) Q = a + bL + cK 
B) Q = a + Lb  + Kc 
C) Q = aLbKc 
D) Q = L + K 
A) Q = a + bL + cK 
B) Q = a + Lb  + Kc 
C) Q = aLbKc 
D) Q = L + K

Question 10

If a firm doubles its usage of all inputs,and output more than doubles,the production function is said to exhibit:

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) increasing marginal returns to a fixed factor of production. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) increasing marginal returns to a fixed factor of production.

Question 11

The average product of labor at a particular point can be determined:

Accepted Answer

A) by the slope of the total product curve at that point. 
B) by multiplying the total product by the quantity of labor at that point. 
C) by the slope of a line from the origin to the particular point on the total product curve. 
D) by the vertical distance of the average product curve from the marginal product curve. 
A) by the slope of the total product curve at that point. 
B) by multiplying the total product by the quantity of labor at that point. 
C) by the slope of a line from the origin to the particular point on the total product curve. 
D) by the vertical distance of the average product curve from the marginal product curve.

Question 12

A production function of the form Q = aLbKc:

Accepted Answer

A) implies constant marginal products for the inputs. 
B) implies constant average products for the inputs. 
C) incorporates the assumption of diminishing returns to the inputs. 
D) cannot imply diminishing returns to the inputs. 
A) implies constant marginal products for the inputs. 
B) implies constant average products for the inputs. 
C) incorporates the assumption of diminishing returns to the inputs. 
D) cannot imply diminishing returns to the inputs.

Question 13

The power associated with an input in a Cobb-Douglas production function implies diminishing returns to that input if the power is _____.

Accepted Answer

A) greater than 1 
B) less than 1 
C) equal to 1 
D) zero 
A) greater than 1 
B) less than 1 
C) equal to 1 
D) zero

Question 14

According to the law of diminishing marginal returns:

Accepted Answer

A) when the amount of some input is increased by equal increments,holding other inputs constant,the resulting increments in output will be negative. 
B) when all inputs are increased proportionately,output eventually will decrease at a smaller rate. 
C) when the amount of some input is increased at equal increments,holding other inputs constant,the resulting increments in output will eventually decrease. 
D) firms will not operate on the portion of the total product curve where marginal product is declining. 
A) when the amount of some input is increased by equal increments,holding other inputs constant,the resulting increments in output will be negative. 
B) when all inputs are increased proportionately,output eventually will decrease at a smaller rate. 
C) when the amount of some input is increased at equal increments,holding other inputs constant,the resulting increments in output will eventually decrease. 
D) firms will not operate on the portion of the total product curve where marginal product is declining.

Question 15

The chemical industry is relatively capital-intensive.It uses more capital than labor.Conversely,the garment industry is relatively labor-intensive (it uses a larger proportion of labor then capital).How would you represent the isoquants for chemicals and garments on an isoquant map with labor on the horizontal axis and capital on the vertical axis?

Accepted Answer

The isoquants for garments and chemicals

Question 16

Diminishing marginal returns refers to the:

Accepted Answer

A) decline in the rate at which extra inputs are employed in production. 
B) fall in average product associated with a unit increase in the fixed input. 
C) decline in total product which is less than proportionate to a change in the fixed input. 
D) fall in output per unit with an incremental increase in the variable input. 
A) decline in the rate at which extra inputs are employed in production. 
B) fall in average product associated with a unit increase in the fixed input. 
C) decline in total product which is less than proportionate to a change in the fixed input. 
D) fall in output per unit with an incremental increase in the variable input.

Question 17

The duration of the short run varies by industry because _____.

Accepted Answer

A) the total labor demand varies by industry 
B) some inputs cost more in some industries 
C) the technology used in production is not the same in all industries 
D) the time required to change a variable input differs by industry 
A) the total labor demand varies by industry 
B) some inputs cost more in some industries 
C) the technology used in production is not the same in all industries 
D) the time required to change a variable input differs by industry

Question 18

The production function exhibits increasing returns to scale when a firm can increase production by more than a proportionate increase in _____.

Accepted Answer

A) costs 
B) one input 
C) all inputs 
D) a fixed input 
A) costs 
B) one input 
C) all inputs 
D) a fixed input

Question 19

What can you conclude about an isoquant that is concave to the origin?

Accepted Answer

A) The level of output shown on the isoquant increases along the curve. 
B) The isoquant represents production in the short run as one input is kept fixed. 
C) The marginal rate of technical substitution increases along the curve. 
D) The slope of the isoquant is infinite. 
A) The level of output shown on the isoquant increases along the curve. 
B) The isoquant represents production in the short run as one input is kept fixed. 
C) The marginal rate of technical substitution increases along the curve. 
D) The slope of the isoquant is infinite.

Question 20

Convexity of a curve implies that the slope of the curve:

Accepted Answer

A) is zero. 
B) is constant. 
C) diminishes along the curve. 
D) approaches infinity. 
A) is zero. 
B) is constant. 
C) diminishes along the curve. 
D) approaches infinity.

Suppose that at a point on an isoquant,the following information is true: MP_L = 3 and MP_K = 2.Then if K falls by 5,L must increase by:

Which of the following statements about the marginal rate of technical substitution is correct?

Define and then derive the expression for the marginal rate of technical substitution.

Returns to scale can be evaluated by looking at how output changes along _____.

Isoquants that are farther away from the origin indicate:

Table 7-3 shows the combinations of labor and capital required to produce various level of output. Table 7-3 -Refer to Table 7-3.If the firm is currently producing 26 units of output using three units of labor,what is the marginal rate of technical substitution of labor for capital at this point?

Which of the following represents a Cobb-Douglas production function?

If a firm doubles its usage of all inputs,and output more than doubles,the production function is said to exhibit:

The average product of labor at a particular point can be determined:

A production function of the form Q = aL^bK^c:

The power associated with an input in a Cobb-Douglas production function implies diminishing returns to that input if the power is _____.

According to the law of diminishing marginal returns:

Diminishing marginal returns refers to the:

The duration of the short run varies by industry because _____.

The production function exhibits increasing returns to scale when a firm can increase production by more than a proportionate increase in _____.

What can you conclude about an isoquant that is concave to the origin?

Convexity of a curve implies that the slope of the curve:

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

Suppose that at a point on an isoquant,the following information is true: MPL = 3 and MPK = 2.Then if K falls by 5,L must increase by:

Which of the following statements about the marginal rate of technical substitution is correct?

Define and then derive the expression for the marginal rate of technical substitution.

Returns to scale can be evaluated by looking at how output changes along _____.

Isoquants that are farther away from the origin indicate:

Table 7-3 shows the combinations of labor and capital required to produce various level of output. Table 7-3 -Refer to Table 7-3.If the firm is currently producing 26 units of output using three units of labor,what is the marginal rate of technical substitution of labor for capital at this point?

Which of the following represents a Cobb-Douglas production function?

If a firm doubles its usage of all inputs,and output more than doubles,the production function is said to exhibit:

The average product of labor at a particular point can be determined:

A production function of the form Q = aLbKc:

The power associated with an input in a Cobb-Douglas production function implies diminishing returns to that input if the power is _____.

According to the law of diminishing marginal returns:

Diminishing marginal returns refers to the:

The duration of the short run varies by industry because _____.

The production function exhibits increasing returns to scale when a firm can increase production by more than a proportionate increase in _____.

What can you conclude about an isoquant that is concave to the origin?

Convexity of a curve implies that the slope of the curve:

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

Suppose that at a point on an isoquant,the following information is true: MP_L = 3 and MP_K = 2.Then if K falls by 5,L must increase by:

A production function of the form Q = aL^bK^c: