Question 1

If a firm doubles its usage of all inputs,and output also 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 2

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 expands from 6 units of capital and 2 units of labor to 12 units of capital and 4 units of labor,the production function exhibits:

Accepted Answer

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

Question 3

When the total product curve with only one variable input is increasing at a decreasing rate:

Accepted Answer

A) marginal product is positive but declining. 
B) marginal product curve is negative and decreasing. 
C) the slope of the marginal product curve is zero. 
D) marginal product is positive and increasing. 
A) marginal product is positive but declining. 
B) marginal product curve is negative and decreasing. 
C) the slope of the marginal product curve is zero. 
D) marginal product is positive and increasing.

Question 4

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-When the labor input employed in production is between points O and C in Figure 7-2:

Accepted Answer

A) average product reaches a minimum. 
B) marginal product reaches a maximum. 
C) marginal product is below average product. 
D) total product first increases at a decreasing rate and then increases at an increasing rate. 
A) average product reaches a minimum. 
B) marginal product reaches a maximum. 
C) marginal product is below average product. 
D) total product first increases at a decreasing rate and then increases at an increasing rate.

Question 5

A farmer is growing corn on an acre of land.Output will be 200 bushels if one worker is hired,500 if two,700 if three,850 if four,and 900 if five.The marginal product of the fourth worker is _____ bushels of corn.

Accepted Answer

A) 850 
B) 150 
C) 212.5 
D) 50 
A) 850 
B) 150 
C) 212.5 
D) 50

Question 6

With capital (K)on the vertical axis and labor (L)on the horizontal axis,graphically illustrate increasing,constant,and decreasing returns to scale.

Accepted Answer

ref SHAPE \* MERGEFORMAT @#IMG-DLM& The spacing of

Question 7

One important difference between indifference curves and isoquants is that:

Accepted Answer

A) indifference curves are convex while isoquants are concave to the origin. 
B) indifference curves can never intersect while isoquants can intersect. 
C) output shown on isoquants is measurable while well-being shown on indifference curves is not. 
D) indifference curves are likely to be positively sloped while isoquants are mostly negatively sloped. 
A) indifference curves are convex while isoquants are concave to the origin. 
B) indifference curves can never intersect while isoquants can intersect. 
C) output shown on isoquants is measurable while well-being shown on indifference curves is not. 
D) indifference curves are likely to be positively sloped while isoquants are mostly negatively sloped.

Question 8

Which of the following correctly explains increasing returns to scale?

Accepted Answer

A) With small scale operations,management inefficiencies are avoided. 
B) Increasing the number of workers in a factory allows division and specialization of labor. 
C) Firms that operate in small industries have higher input procurement costs. 
D) Communication channels in large organizations tend to be complex. 
A) With small scale operations,management inefficiencies are avoided. 
B) Increasing the number of workers in a factory allows division and specialization of labor. 
C) Firms that operate in small industries have higher input procurement costs. 
D) Communication channels in large organizations tend to be complex.

Question 9

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-In Figure 7-2,at point D _____.

Accepted Answer

A) total product is zero 
B) marginal product is zero 
C) average product is negative 
D) average product reaches a maximum 
A) total product is zero 
B) marginal product is zero 
C) average product is negative 
D) average product reaches a maximum

Question 10

The marginal rate of technical substitution:

Accepted Answer

A) equals the marginal product of capital times the marginal product of labor. 
B) measures the rate at which marginal product declines as inputs are increased. 
C) measures the degree to which one input can be substituted for another,output held constant. 
D) is the horizontal distance between two isoquants. 
A) equals the marginal product of capital times the marginal product of labor. 
B) measures the rate at which marginal product declines as inputs are increased. 
C) measures the degree to which one input can be substituted for another,output held constant. 
D) is the horizontal distance between two isoquants.

Question 11

Which of the following correctly describes a production function?

Accepted Answer

A) A production function shows the minimum output that can be produced with given inputs. 
B) A production function relates employment of inputs to output. 
C) A production function identifies output-cost relationships. 
D) A production function identifies the profit maximizing level of output. 
A) A production function shows the minimum output that can be produced with given inputs. 
B) A production function relates employment of inputs to output. 
C) A production function identifies output-cost relationships. 
D) A production function identifies the profit maximizing level of output.

Question 12

Mark is a farmer who faces the production function Q = a + bL + cK,where L is the labor input and K is capital.Show that the law of diminishing returns does not apply to Mark's farm in the short-run.

Accepted Answer

A linear production function of the form

Question 13

The short-run refers to:

Accepted Answer

A) a time period of two years or less. 
B) the time period in which the usage of all inputs are held constant. 
C) the time period in which it is too costly to change the usage of at least one input. 
D) the time period in which the usage of all inputs can be changed. 
A) a time period of two years or less. 
B) the time period in which the usage of all inputs are held constant. 
C) the time period in which it is too costly to change the usage of at least one input. 
D) the time period in which the usage of all inputs can be changed.

Question 14

Which of the following may explain why decreasing returns to scale occur?

Accepted Answer

A) Diminishing marginal rate of technical substitution 
B) The law of diminishing marginal utility 
C) Managerial inefficiencies 
D) Division and specialization of labor 
A) Diminishing marginal rate of technical substitution 
B) The law of diminishing marginal utility 
C) Managerial inefficiencies 
D) Division and specialization of labor

Question 15

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-In Figure 7-2,marginal product reaches a maximum at point _____.

Accepted Answer

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

Question 16

Graphically,the _____ indicates whether returns to scale are increasing,constant,or decreasing.

Accepted Answer

A) spacing of isoquants along a ray from the origin 
B) slope of the isoquant 
C) curvature of the isoquant 
D) steepness of the isoquant 
A) spacing of isoquants along a ray from the origin 
B) slope of the isoquant 
C) curvature of the isoquant 
D) steepness of the isoquant

Question 17

What factors give rise to increasing returns to scale and decreasing returns to scale?

Accepted Answer

First,when a firm is producing a large q

Question 18

A production function identifies the _____.

Accepted Answer

A) minimum output that a specific combination of inputs can produce 
B) maximum number of inputs that can be used to produce output 
C) highest possible output for a given combination of inputs 
D) least-cost method of producing a given level of output 
A) minimum output that a specific combination of inputs can produce 
B) maximum number of inputs that can be used to produce output 
C) highest possible output for a given combination of inputs 
D) least-cost method of producing a given level of output

Question 19

An isoquant shows _____.

Accepted Answer

A) the different quantities of output that can be produced with different quantities of inputs 
B) the combination of inputs that can be used to produce a fixed quantity of output 
C) the different quantities of output that can be produce with fixed quantities of inputs 
D) the combination of inputs than can be used to produce different quantities of output 
A) the different quantities of output that can be produced with different quantities of inputs 
B) the combination of inputs that can be used to produce a fixed quantity of output 
C) the different quantities of output that can be produce with fixed quantities of inputs 
D) the combination of inputs than can be used to produce different quantities of output

Question 20

(
A)What are the characteristics of isoquants?

Accepted Answer

@#IMG-DLM& Isoquants I₁ and I₂ show the different co

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

When the total product curve with only one variable input is increasing at a decreasing rate:

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -When the labor input employed in production is between points O and C in Figure 7-2:

A farmer is growing corn on an acre of land.Output will be 200 bushels if one worker is hired,500 if two,700 if three,850 if four,and 900 if five.The marginal product of the fourth worker is _____ bushels of corn.

With capital (K)on the vertical axis and labor (L)on the horizontal axis,graphically illustrate increasing,constant,and decreasing returns to scale.

One important difference between indifference curves and isoquants is that:

Which of the following correctly explains increasing returns to scale?

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -In Figure 7-2,at point D _____.

The marginal rate of technical substitution:

Which of the following correctly describes a production function?

Mark is a farmer who faces the production function Q = a + bL + cK,where L is the labor input and K is capital.Show that the law of diminishing returns does not apply to Mark's farm in the short-run.

The short-run refers to:

Which of the following may explain why decreasing returns to scale occur?

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -In Figure 7-2,marginal product reaches a maximum at point _____.

Graphically,the _____ indicates whether returns to scale are increasing,constant,or decreasing.

What factors give rise to increasing returns to scale and decreasing returns to scale?

A production function identifies the _____.

An isoquant shows _____.

( A)What are the characteristics of isoquants?

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

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Exam 7: Production

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

When the total product curve with only one variable input is increasing at a decreasing rate:

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -When the labor input employed in production is between points O and C in Figure 7-2:

A farmer is growing corn on an acre of land.Output will be 200 bushels if one worker is hired,500 if two,700 if three,850 if four,and 900 if five.The marginal product of the fourth worker is _____ bushels of corn.

With capital (K)on the vertical axis and labor (L)on the horizontal axis,graphically illustrate increasing,constant,and decreasing returns to scale.

One important difference between indifference curves and isoquants is that:

Which of the following correctly explains increasing returns to scale?

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -In Figure 7-2,at point D _____.

The marginal rate of technical substitution:

Which of the following correctly describes a production function?

Mark is a farmer who faces the production function Q = a + bL + cK,where L is the labor input and K is capital.Show that the law of diminishing returns does not apply to Mark's farm in the short-run.

The short-run refers to:

Which of the following may explain why decreasing returns to scale occur?

Figure 7-2 shows the total product curve for different levels of a variable input,labor. Figure 7-2 -In Figure 7-2,marginal product reaches a maximum at point _____.

Graphically,the _____ indicates whether returns to scale are increasing,constant,or decreasing.

What factors give rise to increasing returns to scale and decreasing returns to scale?

A production function identifies the _____.

An isoquant shows _____.

( A)What are the characteristics of isoquants?

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