Question 1

The costs of production include:

Accepted Answer

A)  the costs that appear on the income statements. 
B)  the opportunity costs foregone by producing a given product. 
C)  accounting costs. 
D)  accounting costs and opportunity costs. 
A)  the costs that appear on the income statements. 
B)  the opportunity costs foregone by producing a given product. 
C)  accounting costs. 
D)  accounting costs and opportunity costs.

Question 2

Cost complementarity exists in a multiproduct cost function when:

Accepted Answer

A)  the average cost of producing one output is reduced when the output of another product is increased. 
B)  the average cost of producing one output is increased when the output of another product is increased. 
C)  the marginal cost of producing one output is increased when the output of another product is decreased. 
D)  the marginal cost of producing one output is reduced when the output of another product is increased. 
A)  the average cost of producing one output is reduced when the output of another product is increased. 
B)  the average cost of producing one output is increased when the output of another product is increased. 
C)  the marginal cost of producing one output is increased when the output of another product is decreased. 
D)  the marginal cost of producing one output is reduced when the output of another product is increased.

Question 3

Suppose the production function is given by Q = min{K, L}. How much output is produced when 10 units of labor and 9 units of capital are employed?

Accepted Answer

A)  0 
B)  4 
C)  9 
D)  13 
A)  0 
B)  4 
C)  9 
D)  13

Question 4

For given input prices, isocosts farther from the origin are associated with:

Accepted Answer

A)  lower costs. 
B)  the same costs. 
C)  higher costs. 
D)  initially lower, then higher costs. 
A)  lower costs. 
B)  the same costs. 
C)  higher costs. 
D)  initially lower, then higher costs.

Question 5

You are the manager of a firm that sells output at a price of $40 per unit. You are interested in hiring a new worker who will increase your firm's output by 2,000 units per year. Several other firms also are interested in hiring this worker.
a. What is the highest annual salary you should be willing to pay this worker to come to your firm?
b. What will determine whether or not you actually have to offer this much to the worker to induce him to join your firm?

Accepted Answer

a. The extra revenue you will earn by hi

Question 6

The difference between average total costs and average variable costs is:

Accepted Answer

A)  marginal cost. 
B)  average fixed cost. 
C)  fixed cost. 
D)  None of the statements is correct. 
A)  marginal cost. 
B)  average fixed cost. 
C)  fixed cost. 
D)  None of the statements is correct.

Question 7

The production function Q = L.5K.5 is called:

Accepted Answer

A)  Cobb Douglas. 
B)  Leontief. 
C)  linear. 
D)  None of the answers are correct. 
A)  Cobb Douglas. 
B)  Leontief. 
C)  linear. 
D)  None of the answers are correct.

Question 8

Which of the following cost functions exhibits economies of scope when three (3) units of good one and two (2) units of good two are produced?

Accepted Answer

A)  C = 50 - 5Q1Q2 + 0.5Q12 + Q22. 
B)  C = 10 + 4Q1Q2 + Q12 + Q22. 
C)  C = 15 + 5Q1Q2 + 2Q1 + 4Q2. 
D)  C = 5 + Q1Q2 + Q12Q22. 
A)  C = 50 - 5Q1Q2 + 0.5Q12 + Q22. 
B)  C = 10 + 4Q1Q2 + Q12 + Q22. 
C)  C = 15 + 5Q1Q2 + 2Q1 + 4Q2. 
D)  C = 5 + Q1Q2 + Q12Q22.

Question 9

Which of the following is NOT a means of acquiring product and process innovations?

Accepted Answer

A)  Independent research and development 
B)  Mass production of the existing product 
C)  Reverse engineering 
D)  Hiring employees of innovating firms 
A)  Independent research and development 
B)  Mass production of the existing product 
C)  Reverse engineering 
D)  Hiring employees of innovating firms

Question 10

In the text, we showed that the multiproduct cost function   exhibits cost complementarity whenever   and economies of scope whenever   a. Can cost complementarity exist without economies of scope?
b. Can there be economies of scope when cost complementarities exist?

Accepted Answer

a. Cost complementarities cannot exist w

Question 11

Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $25 and the per-unit wage, w, is $15, then the average fixed cost of using 81 units of capital and 9 units of labor is:

Accepted Answer

A)  $5. 
B)  $75. 
C)  $80. 
D)  There is insufficient information to determine the average fixed costs. 
A)  $5. 
B)  $75. 
C)  $80. 
D)  There is insufficient information to determine the average fixed costs.

Question 12

You are the manager of Telecall Inc., a small telemarketing company. Your company pays $10,000 per month for office space. A real estate agent has noticed that you are only using 75 percent of your available space and tells you that Telecall could add $800 per month to its bottom line by renting out the space it does not use. Telecall has been asked to do a new telemarketing campaign for a large credit card company, but this would require it to use the remaining office space. What is the opportunity cost of using the extra office space to handle the credit card company's promotion?

Accepted Answer

The $800 per month t

Question 13

Which of the following relations is the slope along a given isoquant?

Accepted Answer

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

Question 14

Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $15 and the per-unit wage, w, is $5, then the average fixed cost of using 16 units of capital and 25 units of labor is:

Accepted Answer

A)  $9. 
B)  $12. 
C)  $56. 
D)  There is insufficient information to determine the average fixed costs. 
A)  $9. 
B)  $12. 
C)  $56. 
D)  There is insufficient information to determine the average fixed costs.

Question 15

The Cobb-Douglas production function is:

Accepted Answer

A)  Q = aK + bL. 
B)  Q = min{bK, cL}. 
C)  Q = max{bK, cL}. 
D)  Q = KaLb. 
A)  Q = aK + bL. 
B)  Q = min{bK, cL}. 
C)  Q = max{bK, cL}. 
D)  Q = KaLb.

Question 16

Given the linear production function Q = 10K + 5L, if Q = 10,000 and K = 500, how much labor is utilized?

Accepted Answer

A)  600 units 
B)  800 units 
C)  500 units 
D)  1,000 units 
A)  600 units 
B)  800 units 
C)  500 units 
D)  1,000 units

Question 17

The absolute value of the slope of the isoquant is the:

Accepted Answer

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

Question 18

Suppose that production for good X is characterized by the following production function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $15 and the per-unit wage, w, is $25, then the average fixed cost of using 9 units of capital and 81 units of labor is:

Accepted Answer

A)  $5. 
B)  $75. 
C)  $80. 
D)  There is insufficient information to determine the average fixed costs. 
A)  $5. 
B)  $75. 
C)  $80. 
D)  There is insufficient information to determine the average fixed costs.

Question 19

The average product of capital of producing 2,991 units of output (find point B) in the table below is:

Accepted Answer

A)  11.1. 
B)  21.9. 
C) 37. 
A)  11.1. 
B)  21.9. 
C) 37.

Question 20

The production function is Q = K.6 L.4. The marginal rate of technical substitution is:

Accepted Answer

A)  2/3 K-1 L. 
B)  K-1 L-1. 
C)  2/3 K L-1. 
D)  K.4 L-.6. 
A)  2/3 K-1 L. 
B)  K-1 L-1. 
C)  2/3 K L-1. 
D)  K.4 L-.6.

The costs of production include:

Cost complementarity exists in a multiproduct cost function when:

Suppose the production function is given by Q = min{K, L}. How much output is produced when 10 units of labor and 9 units of capital are employed?

For given input prices, isocosts farther from the origin are associated with:

The difference between average total costs and average variable costs is:

The production function Q = L^.5K^.5 is called:

Which of the following cost functions exhibits economies of scope when three (3) units of good one and two (2) units of good two are produced?

Which of the following is NOT a means of acquiring product and process innovations?

In the text, we showed that the multiproduct cost function exhibits cost complementarity whenever and economies of scope whenever a. Can cost complementarity exist without economies of scope? b. Can there be economies of scope when cost complementarities exist?

Which of the following relations is the slope along a given isoquant?

The Cobb-Douglas production function is:

Given the linear production function Q = 10K + 5L, if Q = 10,000 and K = 500, how much labor is utilized?

The absolute value of the slope of the isoquant is the:

The average product of capital of producing 2,991 units of output (find point B) in the table below is:

The production function is Q = K^.6 L^.4. The marginal rate of technical substitution is:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 5: The Production Process and Costs

The costs of production include:

Cost complementarity exists in a multiproduct cost function when:

Suppose the production function is given by Q = min{K, L}. How much output is produced when 10 units of labor and 9 units of capital are employed?

For given input prices, isocosts farther from the origin are associated with:

The difference between average total costs and average variable costs is:

The production function Q = L.5K.5 is called:

Which of the following cost functions exhibits economies of scope when three (3) units of good one and two (2) units of good two are produced?

Which of the following is NOT a means of acquiring product and process innovations?

In the text, we showed that the multiproduct cost function exhibits cost complementarity whenever and economies of scope whenever a. Can cost complementarity exist without economies of scope? b. Can there be economies of scope when cost complementarities exist?

Which of the following relations is the slope along a given isoquant?

The Cobb-Douglas production function is:

Given the linear production function Q = 10K + 5L, if Q = 10,000 and K = 500, how much labor is utilized?

The absolute value of the slope of the isoquant is the:

The average product of capital of producing 2,991 units of output (find point B) in the table below is:

The production function is Q = K.6 L.4. The marginal rate of technical substitution is:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

The production function Q = L^.5K^.5 is called:

The production function is Q = K^.6 L^.4. The marginal rate of technical substitution is: