Question 1

According to the table below, what is the total cost of producing 125 units of output?

Accepted Answer

A)  1,000 
B)  2,050 
C)  1,400 
D)  2,400 
A)  1,000 
B)  2,050 
C)  1,400 
D)  2,400

Question 2

The demand for labor by a profit-maximizing firm is determined by:

Accepted Answer

A)  MPL = MC. 
B)  VMPL = MC. 
C)  MPL = W. 
D)  VMPL = W. 
A)  MPL = MC. 
B)  VMPL = MC. 
C)  MPL = W. 
D)  VMPL = W.

Question 3

Suppose that production for good X is characterized by the following production function, Q = 4K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental rate of capital, r, is $86.80 and the per-unit wage, w, is $20, then the average total cost of using 25 units of capital and 49 units of labor is:

Accepted Answer

A)  $5.25. 
B)  $22.50. 
C)  $31.00. 
D)  There is insufficient information to determine the average total costs. 
A)  $5.25. 
B)  $22.50. 
C)  $31.00. 
D)  There is insufficient information to determine the average total costs.

Question 4

It is profitable to hire units of labor as long as the value of marginal product:

Accepted Answer

A)  is less than wage. 
B)  exceeds average product. 
C)  equals price. 
D)  exceeds wage. 
A)  is less than wage. 
B)  exceeds average product. 
C)  equals price. 
D)  exceeds wage.

Question 5

The production function for good X exhibited in the table below is for the:

Accepted Answer

A)  long run, since K is the fixed input. 
B)  short run, since L is the fixed input. 
C)  long run, since K is the variable input. 
D)  short run, since L is the variable input. 
A)  long run, since K is the fixed input. 
B)  short run, since L is the fixed input. 
C)  long run, since K is the variable input. 
D)  short run, since L is the variable input.

Question 6

Suppose the production function is Q = min{3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?

Accepted Answer

A)  3 
B)  6 
C)  9 
D)  None of the statements is correct. 
A)  3 
B)  6 
C)  9 
D)  None of the statements is correct.

Question 7

If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is:

Accepted Answer

A)  2/5. 
B)  1/5. 
C)  10. 
D)  None of the answers are correct. 
A)  2/5. 
B)  1/5. 
C)  10. 
D)  None of the answers are correct.

Question 8

Costs that are forever lost after they have been paid are:

Accepted Answer

A)  production costs. 
B)  fixed costs. 
C)  sunk costs. 
D)  variable costs. 
A)  production costs. 
B)  fixed costs. 
C)  sunk costs. 
D)  variable costs.

Question 9

The isoquants are normally drawn with a convex shape because inputs are:

Accepted Answer

A)  not perfectly substitutable. 
B)  perfectly substitutable. 
C)  perfect complements. 
D)  normal goods. 
A)  not perfectly substitutable. 
B)  perfectly substitutable. 
C)  perfect complements. 
D)  normal goods.

Question 10

The marginal cost curve:

Accepted Answer

A)  lies always below the average total cost curve (AT
C) . 
B)  lies always above the average variable cost curve (AV
C) . 
C)  intersects the ATC and AVC at their maximum points. 
D)  intersects the ATC and AVC at their minimum points. 
A)  lies always below the average total cost curve (AT
C) . 
B)  lies always above the average variable cost curve (AV
C) . 
C)  intersects the ATC and AVC at their maximum points. 
D)  intersects the ATC and AVC at their minimum points.

Question 11

The short run is defined as the time frame:

Accepted Answer

A)  in which there are no fixed factors of production. 
B)  in which there are fixed factors of production. 
C)  less than one year. 
D)  less than three years. 
A)  in which there are no fixed factors of production. 
B)  in which there are fixed factors of production. 
C)  less than one year. 
D)  less than three years.

Question 12

Which of the following is NOT a measure of productivity?

Accepted Answer

A)  Total product 
B)  Marginal product 
C)  Average advertising 
D)  Input-output ratio 
A)  Total product 
B)  Marginal product 
C)  Average advertising 
D)  Input-output ratio

Question 13

Changes in the price of an input cause:

Accepted Answer

A)  isoquants to become steeper. 
B)  slope changes in the isocost line. 
C)  parallel shifts of the isocost lines. 
D)  changes in both the isoquants and isocosts of equal magnitude. 
A)  isoquants to become steeper. 
B)  slope changes in the isocost line. 
C)  parallel shifts of the isocost lines. 
D)  changes in both the isoquants and isocosts of equal magnitude.

Question 14

Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

Accepted Answer

A)  2 
B)  5 
C)  25 
D)  50 
A)  2 
B)  5 
C)  25 
D)  50

Question 15

For the cost function C(Q) = 500 + 12Q + 4Q2 + Q3, what is the marginal cost of producing the eighth unit of output?

Accepted Answer

A)  $184 
B)  $268 
C)  $524 
D)  $852 
A)  $184 
B)  $268 
C)  $524 
D)  $852

Question 16

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 $125, 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 17

An isoquant defines the combination of inputs that yield the producer:

Accepted Answer

A)  higher levels of output than the desired level of output. 
B)  lower levels of output than the desired level of output. 
C)  the same level of output. 
D)  None of the statements is correct. 
A)  higher levels of output than the desired level of output. 
B)  lower levels of output than the desired level of output. 
C)  the same level of output. 
D)  None of the statements is correct.

Question 18

Economies of scale exist whenever long-run average costs:

Accepted Answer

A)  increase as output is increased. 
B)  decrease as output is increased. 
C)  remain constant as output is increased. 
D)  None of the statements is correct. 
A)  increase as output is increased. 
B)  decrease as output is increased. 
C)  remain constant as output is increased. 
D)  None of the statements is correct.

Question 19

If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 36 is:

Accepted Answer

A)  1/3. 
B)  1/6. 
C)  2/3. 
D)  None of the answers are correct. 
A)  1/3. 
B)  1/6. 
C)  2/3. 
D)  None of the answers are correct.

Question 20

The marginal rate of technical substitution:

Accepted Answer

A)  determines the rate at which a producer can substitute between two inputs in order to increase one additional unit of output. 
B)  is the absolute value of the slope of the isoquant. 
C)  is the absolute value of marginal revenue. 
D)  is constant along the isoquant curve. 
A)  determines the rate at which a producer can substitute between two inputs in order to increase one additional unit of output. 
B)  is the absolute value of the slope of the isoquant. 
C)  is the absolute value of marginal revenue. 
D)  is constant along the isoquant curve.

According to the table below, what is the total cost of producing 125 units of output?

The demand for labor by a profit-maximizing firm is determined by:

It is profitable to hire units of labor as long as the value of marginal product:

The production function for good X exhibited in the table below is for the:

Suppose the production function is Q = min{3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?

If the production function is Q = K^.5L^.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is:

Costs that are forever lost after they have been paid are:

The isoquants are normally drawn with a convex shape because inputs are:

The marginal cost curve:

The short run is defined as the time frame:

Which of the following is NOT a measure of productivity?

Changes in the price of an input cause:

Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

For the cost function C(Q) = 500 + 12Q + 4Q² + Q³, what is the marginal cost of producing the eighth unit of output?

An isoquant defines the combination of inputs that yield the producer:

Economies of scale exist whenever long-run average costs:

If the production function is Q = K^.5L^.5 and capital is fixed at 1 unit, then the average product of labor when L = 36 is:

The marginal rate of technical substitution:

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

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Exam 5: The Production Process and Costs

According to the table below, what is the total cost of producing 125 units of output?

The demand for labor by a profit-maximizing firm is determined by:

It is profitable to hire units of labor as long as the value of marginal product:

The production function for good X exhibited in the table below is for the:

Suppose the production function is Q = min{3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?

If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is:

Costs that are forever lost after they have been paid are:

The isoquants are normally drawn with a convex shape because inputs are:

The marginal cost curve:

The short run is defined as the time frame:

Which of the following is NOT a measure of productivity?

Changes in the price of an input cause:

Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

For the cost function C(Q) = 500 + 12Q + 4Q2 + Q3, what is the marginal cost of producing the eighth unit of output?

An isoquant defines the combination of inputs that yield the producer:

Economies of scale exist whenever long-run average costs:

If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 36 is:

The marginal rate of technical substitution:

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

If the production function is Q = K^.5L^.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is:

For the cost function C(Q) = 500 + 12Q + 4Q² + Q³, what is the marginal cost of producing the eighth unit of output?

If the production function is Q = K^.5L^.5 and capital is fixed at 1 unit, then the average product of labor when L = 36 is: