Question 1

The difference between estimating a short-run vs. a long-run production function is that

a. the short-run function only depends on K; the long-run function depends on both K and L.

b. the short-run function only depends on L; the long-run function depends on both K and L.

c. the long-run function only depends on L; the short-run function depends on both K and L.

d. the short-run function has fixed output; the long-run function has output that can change.

Question 2

Of the following equations, which has a cubic functional form?

a. Q=a(K2)(L2)+bKL+cQ=a(K2)(L2)+bKL+c

b. Q=aL2+bK2+cL+dK+eQ=aL2+bK2+cL+dK+e

c. Q=aK2+bKL+cLQ=aK2+bKL+cL

d. Q=aL3+bL2+cLQ=aL3+bL2+cL

Question 3

A short-run production function is described by Q=0.002L3+0.16L2Q=0.002L3+0.16L2. Which of the following equations is NOT correct, based on this production function?

Select one:

a. AP=0.006L3+0.32L2AP=0.006L3+0.32L2

b. MP=0.006L2+0.32LMP=0.006L2+0.32L

c. AP=0.002L2+0.16LAP=0.002L2+0.16L

Question 4

Why should you force your estimated production function through the origin?

a. We presume no output is produced if no inputs are used.

b. If capital is fixed, then labor input must be zero.

c. If there is no labor input, then negative marginal product has been reached.

d. If no output is produced, no costs are incurred.

Question 5

Generally speaking, as you move forward in time,

a. the CPI value tends to rise, indicating that the value of a dollar is dropping.

b. prices of goods and services rise, but the CPI value falls.

c. the price of everything that consumers buy (each item of the CPI) increases.

d. inflation occurs because the value of a dollar increases.

Question 6

Assume that the value of the GDP Deflator in 2014 is 108.1 and in 2018 is 115.2. Also assume that you spent $1,000 on office supplies back in 2014 but are curious what that amount would be equivalent to in 2018 dollars. Which equation is set up correctly if you wished to convert that $1,000 from 2014 dollars into 2018 dollars?

a. $1,000 * (108.1 / 115.2)

b. 115.2 * (108.1 / $1,000)

c. $1,000 * (115.2 / 108.1)

d. $1,000 / (115.2 * 108.1)

Question 7

You've run a regression and estimated an equation for TVC. To obtain equations for AVC and SMC, you

Select one:

a. can use the coefficient estimates from the TVC regression to get SMC, but must run a regression separately for AVC.

b. can use the coefficient estimates from the TVC regression to get AVC, but must run a regression separately for SMC.

c. can use the coefficient estimates from the TVC regression.

d. must also run regressions to estimate those equations.

Question 8

Conceptually, if you've run a regression to obtain an equation for TC (total cost), you could obtain an equation for TVC by

a. dividing each term in the TC equation by Q.

b. dropping the intercept since the intercept represents fixed costs.

c. taking its derivative with respect to Q.