Question 1

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 2

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 3

Use the following table to answer the questions :
Table 7-4 shows the shows the quantities of labor and capital required to produce various levels of output.
 
-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 4

Answer the following:
a)What are the characteristics of isoquants?
b)How do they differ from indifference curves?
c)Graphically show that isoquants cannot intersect.

Accepted Answer

a)An isoquant is a curve that is used to

Question 5

The slope of a ray from the origin to the total product curve measures _____.

Accepted Answer

A) the marginal rate of technical substitution 
B) the marginal product of the variable factor 
C) the average product of the variable factor 
D) the maximum output 
A) the marginal rate of technical substitution 
B) the marginal product of the variable factor 
C) the average product of the variable factor 
D) the maximum output

Question 6

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 7

Table 7-4 shows the quantities of labor and capital required to produce various levels of output.
 
Refer to Table 7-4.What is the marginal product of the fourth worker?

Accepted Answer

A) 10 
B) 14 
C) 42 
D) 56 
A) 10 
B) 14 
C) 42 
D) 56

Question 8

Given a production function   
show the relationship between marginal and average product mathematically.

Accepted Answer

Capital and technology remain fixed in t

Question 9

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.

Question 10

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 11

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 12

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 13

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 14

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 15

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 16

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 17

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 18

Use the following figure to answer the questions :
Figure 7-2 shows the total product curve for different levels of a variable input,labor.  
-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 19

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 20

Use the following figure to answer the questions :
Figure 7-2 shows the total product curve for different levels of a variable input,labor.  
-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

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

Which of the following correctly explains increasing returns to scale?

Answer the following: a)What are the characteristics of isoquants? b)How do they differ from indifference curves? c)Graphically show that isoquants cannot intersect.

The slope of a ray from the origin to the total product curve measures _____.

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

Table 7-4 shows the quantities of labor and capital required to produce various levels of output. Refer to Table 7-4.What is the marginal product of the fourth worker?

Given a production function show the relationship between marginal and average product mathematically.

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

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

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

When marginal product is decreasing:

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

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

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

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.

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

Linear homogeneous production functions are often used in analysis because:

Use the following figure to answer the questions : Figure 7-2 shows the total product curve for different levels of a variable input,labor. -In Figure 7-2,at point 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

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Exam 7: Production

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

Which of the following correctly explains increasing returns to scale?

Answer the following: a)What are the characteristics of isoquants? b)How do they differ from indifference curves? c)Graphically show that isoquants cannot intersect.

The slope of a ray from the origin to the total product curve measures _____.

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

Table 7-4 shows the quantities of labor and capital required to produce various levels of output. Refer to Table 7-4.What is the marginal product of the fourth worker?

Given a production function show the relationship between marginal and average product mathematically.

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

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

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

When marginal product is decreasing:

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

A production function of the form Q = aLbKc:

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

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.

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

Linear homogeneous production functions are often used in analysis because:

Use the following figure to answer the questions : Figure 7-2 shows the total product curve for different levels of a variable input,labor. -In Figure 7-2,at point 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

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