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Exam 6: Production

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Question 21

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Suppose there are ten identical manufacturing firms that produce computer chips with machinery (capital, K) and labor (L) , and each firm has a production function of the form q = 10KL^0.5. What is the industry-level production function?

A) Q = 10K¹⁰L⁵
B) Q = 100KL^0.5
C) Q = 100L^0.5
D) none of the above

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Question 22

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Suppose the production of long-distance airline flights is described by a fixed proportion production process in which three crew members (i.e., labor) are required for each aircraft (i.e., capital) . If the airline operates with four crew members per plane, then we know that:

A) the production process violates diminishing margin returns.
B) production at this point is technically inefficient.
C) the isoquants for this production process are upward sloping.
D) the airline will have negative profits.

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Question 23

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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:

Which would not increase the productivity of labor?

Figure 6.4.3 -Refer to Figure 6.4.3. The situation pictured is one of:

The production function of pizzas for One Guy's Pizza shop is K represents the number of ovens One Guy's Pizza uses and is fixed in the short-run at 4 ovens. L represents the number of labor hours One Guy's Pizza employees and is variable in the short and long-run. Fill in the empty columns in the table below.

An important factor that contributes to labor productivity growth is:

You operate a car detailing business with a fixed amount of machinery (capital) , but you have recently altered the number of workers that you employ per hour. As you increased the number of employees hired per hour from three to five, your total output increased by 5 cars to 15 cars per hour. What is the average product of labor at the new levels of labor?

Which of the following statements does not explain why US health care expenditures are higher than in other countries?

Michael's Dairy farm production function is given by where K is the number of machine milkers and L is the amount of labor hours he uses. Does this production function exhibit increasing, constant or decreasing returns to scale? Holding the number of machine milkers constant at 16, is the marginal product of labor increasing, constant or decreasing as more labor is used?

Use the following two statements to answer this question: I. The marginal product of labor is the slope of the line from the origin to the total product curve at that level of labor usage. II The average product of labor is the slope of the line that is tangent to the total product curve at that level of labor usage.

In Example 6.5 in the book, the authors use the observed production data from the U.S. carpet industry to show that small firms likely have constant returns to scale and that large firms likely have increasing returns to scale. Are returns to scale in this industry likely to continue increasing as these firms become even larger?

Marge's Hair Salon production function is where K is the number of hair dryers and L is the number of labor hours she employs. Does this production function exhibit increasing, decreasing, or constant returns to scale? At the moment, Marge uses 16 labor hours and 16 hair dryers. Suppose that Marge can use any amount of either input without affecting the market costs of the inputs. If Marge increased her use of labor hours and hair dryers by 10%, how much would her production increase? Increasing the use of both inputs by 10% will result in Marge's costs increasing by exactly 10%. If Marge increases her use of all inputs by 10%, what will increase more, her production or her costs? Given that Marge earns $12.50 for each unit produced, do her profits go up or down when she increases her input use by 10%?

At a given level of labor employment, knowing the difference between the average product of labor and the marginal product of labor tells you:

Figure 6.3.2 -Refer to Figure 6.3.2 above. An examination of the production isoquants in the diagram below reveals that:

Laura's Internet Services firm can design computer systems according to the function where K is the amount of gigabyte storage she has available and L is the amount of labor hours she employs. Currently, Laura has 125 gigabytes of storage. Sketch the change in the marginal product of labor curve for Laura's firm for values of if she increases her gigabyte storage capacity to 216.

Writing total output as Q, change in output as △Q, total labor employment as L, and change in labor employment as △L, the marginal product of labor can be written algebraically as:

An isoquant:

A bakery operating in the short run has found that when the level of employment in its baking room was increased from 4 to 10, in increments of one, its corresponding levels of production of bread were a. Calculate the marginal product of labor. b. Explain whether this production function exhibits diminishing marginal productivity of labor.

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