Question 1

Which of the following statements is true of the relationship between marginal product and average product of labor?

Accepted Answer

A) When the marginal product of labor is decreasing,the average product of labor must also be decreasing. 
B) When the average product of labor is increasing,the marginal product of labor must also be increasing. 
C) When the marginal and average products of labor are equal,the marginal product is at its minimum. 
D) When the average product of labor is decreasing,average product must be greater than marginal product. 
A) When the marginal product of labor is decreasing,the average product of labor must also be decreasing. 
B) When the average product of labor is increasing,the marginal product of labor must also be increasing. 
C) When the marginal and average products of labor are equal,the marginal product is at its minimum. 
D) When the average product of labor is decreasing,average product must be greater than marginal product.

Question 2

The fact that a large-scale operation can take advantage of specialization of labor often gives rise to _____.

Accepted Answer

A) constant marginal rate of substitution 
B) diseconomies of scale 
C) increasing returns to scale 
D) management inefficiencies 
A) constant marginal rate of substitution 
B) diseconomies of scale 
C) increasing returns to scale 
D) management inefficiencies

Question 3

All of the following give rise to increasing returns to scale,except:

Accepted Answer

A) specialization and division of labor. 
B) the use of certain large-scale technologies 
C) the use of the latest technology. 
D) diversification of production. 
A) specialization and division of labor. 
B) the use of certain large-scale technologies 
C) the use of the latest technology. 
D) diversification of production.

Question 4

Draw isoquants for the following:
(
A)Tree Fellas Ltd.is a logging firm where the labor input is loggers and capital refers to chainsaws.The output produced is measured in terms of number of trees felled.One logger uses one chainsaw;a logger without a chainsaw will not contribute to output and neither will a chainsaw without a logger.

Accepted Answer

The inputs used in production of output

Question 5

When marginal product is decreasing:

Accepted Answer

A) average product must also be decreasing. 
B) total product is decreasing. 
C) total product is increasing at a decreasing rate. 
D) marginal product must be greater than average product. 
A) average product must also be decreasing. 
B) total product is decreasing. 
C) total product is increasing at a decreasing rate. 
D) marginal product must be greater than average product.

Question 6

The law of diminishing returns holds only:

Accepted Answer

A) for goods with inelastic demand. 
B) when one input is fixed. 
C) in the long run. 
D) in a competitive market. 
A) for goods with inelastic demand. 
B) when one input is fixed. 
C) in the long run. 
D) in a competitive market.

Question 7

The law of diminishing marginal returns _____.

Accepted Answer

A) is relevant in the short run. 
B) assumes all the inputs are fixed 
C) is applicable to fixed and variable inputs 
D) applies when all inputs are increased 
A) is relevant in the short run. 
B) assumes all the inputs are fixed 
C) is applicable to fixed and variable inputs 
D) applies when all inputs are increased

Question 8

Figure 7-1 shows the total product curve for different levels of a variable input,labor.
Figure 7-1  
-Refer to Figure 7-1.To the left of point B:

Accepted Answer

A) marginal product is rising but average product is falling. 
B) marginal product is rising and is above the average product. 
C) marginal product is falling but average product is rising. 
D) total product is increasing at a decreasing rate. 
A) marginal product is rising but average product is falling. 
B) marginal product is rising and is above the average product. 
C) marginal product is falling but average product is rising. 
D) total product is increasing at a decreasing rate.

Question 9

Linear homogeneous production functions are often used in analysis because:

Accepted Answer

A) many real world production processes exhibit constant returns to scale. 
B) they can be used to exhibit increasing or decreasing returns to scale. 
C) they can be adapted to suit any industry. 
D) they apply to any production process. 
A) many real world production processes exhibit constant returns to scale. 
B) they can be used to exhibit increasing or decreasing returns to scale. 
C) they can be adapted to suit any industry. 
D) they apply to any production process.

Question 10

In a Cobb-Douglas production function,the law of diminishing returns does not apply to a variable input if:

Accepted Answer

A) the power associated with the input is less than one. 
B) the sum of the powers of the other inputs is equal to one. 
C) the sum of the powers of the other inputs is greater than one. 
D) the power associated with the input is equal to or greater than unity. 
A) the power associated with the input is less than one. 
B) the sum of the powers of the other inputs is equal to one. 
C) the sum of the powers of the other inputs is greater than one. 
D) the power associated with the input is equal to or greater than unity.

Question 11

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 48 units of capital and 16 units of labor to 96 units of capital and 32 units of labor,the production function exhibits:

Accepted Answer

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

Question 12

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

Accepted Answer

A) the marginal product of labor is falling. 
B) the average product of labor is rising. 
C) total product rises and then falls. 
D) marginal product reaches its minimum. 
A) the marginal product of labor is falling. 
B) the average product of labor is rising. 
C) total product rises and then falls. 
D) marginal product reaches its minimum.

Question 13

If the marginal product of labor is 25 and the marginal product of capital 10,what is the marginal rate of technical substitution of labor for capital?

Accepted Answer

A) 0.6 
B) 1 
C) 1.5 
D) 2.5 
A) 0.6 
B) 1 
C) 1.5 
D) 2.5

Question 14

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 average product of five hours work is _____ nails.

Accepted Answer

A) 80 
B) 380 
C) 320 
D) 76 
A) 80 
B) 380 
C) 320 
D) 76

Question 15

A production function for widgets will _____.

Accepted Answer

A) show the relationship between the inputs used in the production of widgets and the cost of acquiring these inputs 
B) identify the least quantity of inputs that can be used to produce a given level of widgets 
C) identify the maximum quantity of widgets that can be produced given the budget of the firm 
D) identify the maximum quantity of widgets that can be produced by each specific combination of inputs 
A) show the relationship between the inputs used in the production of widgets and the cost of acquiring these inputs 
B) identify the least quantity of inputs that can be used to produce a given level of widgets 
C) identify the maximum quantity of widgets that can be produced given the budget of the firm 
D) identify the maximum quantity of widgets that can be produced by each specific combination of inputs

Question 16

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.Based on the input-usage ratio,we can say that the firm is operating _____.

Accepted Answer

A) at an economic loss 
B) in the short-run 
C) in a constant-cost industry 
D) in the long-run 
A) at an economic loss 
B) in the short-run 
C) in a constant-cost industry 
D) in the long-run

Question 17

Figure 7-2 shows the total product curve for different levels of a variable input,labor.
Figure 7-2  
-In Figure 7-2,average 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 18

Given a production function $Q = Q ( K , L )$ show the relationship between marginal and average product mathematically.

Accepted Answer

Capital and technology remain fixed in t

Question 19

A technologically efficient level of output is the _____.

Accepted Answer

A) maximum output possible from the least amount of inputs 
B) level of output produced using the latest technology available 
C) cost-minimizing level of output 
D) maximum output available from a given set of inputs 
A) maximum output possible from the least amount of inputs 
B) level of output produced using the latest technology available 
C) cost-minimizing level of output 
D) maximum output available from a given set of inputs

Question 20

If the level of technical know-how increases,how would this change the total product curve?

Accepted Answer

A) It would extend horizontally. 
B) It would become more bowed. 
C) It would shift upwards. 
D) It would become flatter. 
A) It would extend horizontally. 
B) It would become more bowed. 
C) It would shift upwards. 
D) It would become flatter.

Which of the following statements is true of the relationship between marginal product and average product of labor?

The fact that a large-scale operation can take advantage of specialization of labor often gives rise to _____.

All of the following give rise to increasing returns to scale,except:

When marginal product is decreasing:

The law of diminishing returns holds only:

The law of diminishing marginal returns _____.

Figure 7-1 shows the total product curve for different levels of a variable input,labor. Figure 7-1 -Refer to Figure 7-1.To the left of point B:

Linear homogeneous production functions are often used in analysis because:

In a Cobb-Douglas production function,the law of diminishing returns does not apply to a variable input if:

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

If the marginal product of labor is 25 and the marginal product of capital 10,what is the marginal rate of technical substitution of labor for capital?

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 average product of five hours work is _____ nails.

A production function for widgets will _____.

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

Given a production function $Q = Q ( K , L )$ show the relationship between marginal and average product mathematically.

A technologically efficient level of output is the _____.

If the level of technical know-how increases,how would this change the total product 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

Which of the following statements is true of the relationship between marginal product and average product of labor?

The fact that a large-scale operation can take advantage of specialization of labor often gives rise to _____.

All of the following give rise to increasing returns to scale,except:

When marginal product is decreasing:

The law of diminishing returns holds only:

The law of diminishing marginal returns _____.

Figure 7-1 shows the total product curve for different levels of a variable input,labor. Figure 7-1 -Refer to Figure 7-1.To the left of point B:

Linear homogeneous production functions are often used in analysis because:

In a Cobb-Douglas production function,the law of diminishing returns does not apply to a variable input if:

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

If the marginal product of labor is 25 and the marginal product of capital 10,what is the marginal rate of technical substitution of labor for capital?

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 average product of five hours work is _____ nails.

A production function for widgets will _____.

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

Given a production function Q=Q(K,L)Q = Q ( K , L )Q=Q(K,L) show the relationship between marginal and average product mathematically.

A technologically efficient level of output is the _____.

If the level of technical know-how increases,how would this change the total product 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

Given a production function $Q = Q ( K , L )$ show the relationship between marginal and average product mathematically.