Question 1(1 point)

A function that indicates the maximum output per unit of time that a firm can produce, for every

combination of inputs with a given technology, is called

Question 1 options:

an isoquant.

a production possibility curve.

a production function.

an isocost function.

Question 2(1 point)

. Writing total output as Q, change in output asDQ, total labor employment as L, and change in labor

employment asDL, the marginal product of labor can be written algebraically as

Question 2 options:

DQL.

Q / L.

DL /DQ.

DQ /DL.

Question 3(1 point)

The slope of the total product curve is the

Question 3 options:

average product.

slope of a line from the origin to the point.

marginal product.

marginal rate of technical substitution.

Question 4(1 point)

. When the average product is decreasing, marginal product

Question 4 options:

equals average product.

is increasing.

exceeds average product.

is decreasing.

is less than average product.

Question 5(1 point)

In a certain textile firm, labor is the only short term variable input. The manager notices that the

marginal product of labor is the same for each unit of labor, which implies that

Question 5 options:

the average product of labor is always greater that the marginal product of labor

the average product of labor is always equal to the marginal product of labor

the average product of labor is always less than the marginal product of labor

as more labor is used, the average product of labor falls

there is no unambiguous relationship between labor's marginal and average products.

Question 6(1 point)

Marginal product crosses the horizontal axis (is equal to zero) at the point where

Question 6 options:

average product is maximized.

total product is maximized.

diminishing returns set in.

output per worker reaches a maximum.

all of the above are true.

Question 7(1 point)

. Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is eighteen,

Question 7 options:

marginal product is rising.

marginal product is falling.

average product is rising.

average product is falling.

Question 8(1 point)

Consider the following statements when answering this question;

I.Suppose a semiconductor chip factory uses a technology where the average product of labor is constant for all employment levels.This technology obeys the law of diminishing returns.

II.Suppose a semiconductor chip factory uses a technology where the marginal product of labor rises, then is constant and finally falls as employment increases.This technology obeys the law of diminishing returns.

Question 8 options:

I is true, and II is false.

I is false, and II is true.

Both I and II are true.

Both I and II are false.

Question 9(1 point)

. If we take the production function and hold the level of output constant, allowing the amounts of capital

and labor to vary, the curve that is traced out is called:

Question 9 options:

the total product.

an isoquant.

the average product.

the marginal product.

none of the above.

Question 10(1 point)

Use the following two statements to answer this question:

I.Isoquants cannot cross one another.

II.An isoquant that is twice the distance from the origin represents twice the level of output.

Question 10 options:

Both I and II are true.

I is true, and II is false.

I is false, and II is true.

Both I and II are false.

Question 11(1 point)

Use the following two statements to answer this question:

I.If the marginal product of labor is zero, the total product of labor is at its maximum.

IIIf the marginal product of labor is at its maximum, the average product of labor is falling.

Question 11 options:

Both I and II are true.

I is true, and II is false.

I is false, and II is true.

Both I and II are false.

Question 12(1 point)

. The marginal rate of technical substitution is equal to the

Question 12 options:

slope of the total product curve.

change in output minus the change in labor.

change in output divided by the change in labor.

ratio of the marginal products of the inputs

Question 13(1 point)

The diagram below shows an isoquant for the production of wheat.

Which point has the highest marginal productivity of labor? (Diagram above)

Question 13 options:

Point A.

Point B

Point C

Point D

Cannot be determined from the information

Question 14(1 point)

The marginal rate of technical substitution is equal to:

Question 14 options:

the absolute value of the slope of an isoquant.

the ratio of the marginal products of the inputs.

the ratio of the prices of the inputs.

all of the above.

(a) and (b) only.

Question 15(1 point)

A firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one unit

of labor, but does not want its output quantity to change, the firm should

Question 15 options:

use five fewer units of capital.

use 0.8 fewer units of capital.

use 1.25 fewer units of capital.

add 1.25 units of capital.

None of the above

Question 16(1 point)

. Increasing returns to scale in production means

Question 16 options:

more than 10% as much of all inputs are required to increase output 10%.

less than twice as much of all inputs are required to double output.

more than twice as much of only one input is required to double output.

isoquants must be linear.

Question 19(1 point)

. A farmer uses M units of machinery and L hours of labor to produce C tons of corn, with the following

production function C = L^0.5M^0.75.This production function exhibits

Question 19 options:

decreasing returns to scale for all output levels

constant returns to scale for all output levels

increasing returns to scale for all output levels

no clear pattern of returns to scale

Question 20(1 point)

If input prices are constant, a firm with increasing returns to scale can expect

Question 20 options:

costs to double as output doubles.

costs to more than double as output doubles.

costs to go up less than double as output doubles.

to hire more and more labor for a given amount of capital, since marginal product increases.

to never reach the point where the marginal product of labor is equal to the wage.

Question 21(1 point)

.Suppose that a firm's production function is given by KL +K.At point A the firm uses K=3 and L=5 units of labor.At point B, along the same isoquant, the firm would use only 1 unit of capital.Calculate how much labor is required at the point B.

Question 21 options:

7 units

17 units

18 units

10 units

None of the above

Question 22(1 point)

The manager at Skip's Pottery knows the marginal product of labor equals 6 and the marginal product of capital equals 30. Skip will be purchasing one more unit of capital. If the firm wishes to keep the level of output unchanged, then the manager must

Question 22 options:

decrease labor hired by 5 units.

decrease labor hired by 1/5 unit.

increase labor hired by 5 units.

increase labor hired by 1/5 unit.

Question 23(1 point)

.The local factory noticed that each of the following combinations of capital and labor produced the same level of output: (L=1, K=20) (L=2, K=15) (L=3, K=11) (L=4, K=8) (L=5, K=6) (L =6, K=5). This evidence suggests that:

Question 23 options:

capital and labor are perfect substitutes.

the isoquant is convex.

capital and labor are perfect complements.

there are decreasing returns to scale.

Question 24(1 point)

A technological improvement

Question 24 options:

changes the shape of the short-run production function.

results in a move from one point to another along a short-run production function.

has no impact on the production function.

shifts the short-run production function upward

Question 25(1 point)

The average product of labor is maximized when the marginal product of labor

Question 25 options:

equals the average product of labor

equals zero

is maximized

None of the above

Question 26(1 point)

The marginal product of labor in the production of computer chips is 50 chips per hour. The marginal rate of technical substitution of hours of labor for hours of machine capital is 1/4. What is the marginal product of capital?

Question 26 options:

12.5

0.25

200

Same asMPL

Both a and d.

Question 27(1 point)

What type of returns to scale are exhibited by production functions iii) and iv) given above:

Question 27 options:

iii) exhibits increasing and iv) exhibits decreasing returns to scale.

iii) exhibits constant and iv) exhibits decreasing returns to scale

iii) exhibits decreasing and iv) exhibits constant returns to scale

iii) exhibits constant and iv) exhibits increasing returns to scale

iii) exhibits increasing and iv) exhibits constant returns to scale.

Question 28(1 point)

. Look at production functionsi)andiv)in exhibit Exercise 8 above.

Question 28 options:

MPLis increasing in i) and is constant in iv).

MPLis increasing in i) and decreasing in iv).

MPLis constant in i) and constant in in iv).

MPLis decreasing in i) and increasing in iv).

MPLis constant in i)and decreasing in iv).

Question 29(1 point)

If input prices are constant, a firm with increasing returns to scale can expect

Question 29 options:

costs to double as output doubles.

costs to more than double as output doubles.

costs to go up less than double as output doubles.

to hire more and more labor for a given amount of capital, since marginal product increases.

to never reach the point where the marginal product of labor is equal to the wage.