Question 1

Which of the following is NOT a property of isoquants?

Accepted Answer

A)  They do not cross.
B)  The closer they are to the origin, the higher the level of output.
C)  They have a downward slope.
D)  They are "thin."

Question 2

Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. Which of the following statements is TRUE?

Accepted Answer

A)  The production function has decreasing returns to scale.
B)  The production function has increasing returns to scale.
C)  The production function has constant returns to scale.
D)  Returns to scale vary with the level of output.

Question 3

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Accepted Answer

The production function below illustrate...

Question 4

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons, there are

Accepted Answer

A)  increasing returns to scale.
B)  decreasing returns to scale.
C)  constant returns to scale.
D)  diseconomies of scale.

Question 5

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

Accepted Answer

A)  100-200 units
B)  200-400 units
C)  400-600 units
D)  There is insufficient information to answer the question.

Question 6

Decreasing returns to scale may occur because increasing the amount of inputs used

Accepted Answer

A)  increases specialization.
B)  always increases the amount of output produced.
C)  may cause coordination difficulties.
D)  increases efficiency.

Question 7

-The table in the above figure shows the levels of output resulting from different levels of inputs. At which level of input are there constant returns to scale?

Accepted Answer

A)  400-600 units
B)  Constant returns to scale exist throughout all levels of production.
C)  Constant returns to scale do not exist at any level of production.
D)  No firm conclusions can be drawn.

Question 8

Explain why labor might not always be a variable input.

Accepted Answer

In the real world, units of labor are no...

Question 9

-At Joey's Lawncutting Service, a lawn mower cannot cut grass without a laborer. A laborer cannot cut grass without a lawn mower. Which graph in the above figure best represents the isoquants for Joey's Lawncutting Service when units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis?

Accepted Answer

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

Question 10

Labor saving nonneutral technical progress allows a firm to

Accepted Answer

A)  produce more output with the same inputs.
B)  use less labor and the same amount of other inputs to produce the same level of output.
C)  use more labor to produce the same level of output.
D)  use less labor and more of other inputs to produce the same level of output.

Question 11

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Accepted Answer

In the short run, MPL = 0.25 ∗...

Question 12

A firm that engages in efficient production

Accepted Answer

A)  cannot produce the same output with fewer inputs.
B)  could produce the same output with fewer inputs if it wanted to.
C)  is not interested in profit maximization.
D)  uses old technology to minimize costs.

Question 13

Let the production function be q = ALaKb. The function exhibits constant returns to scale if

Accepted Answer

A)  a + b = 1.
B)  a + b > 1.
C)  a + b 
D)  Cannot be determined with the information given.

Question 14

Which of the following statements best summarizes the law of diminishing marginal returns?

Accepted Answer

A)  In the short run, as more labor is hired, output diminishes.
B)  In the short run, as more labor is hired, output increases at a diminishing rate.
C)  In the short run, the amount of labor a firm will hire diminishes as output increases.
D)  As more labor is hired, the length of time that defines the short run diminishes.

Question 15

Which of the following is least likely to be considered an input to production?

Accepted Answer

A)  a supervisor's time
B)  an integrated circuit fabrication plant
C)  wind
D)  None of the above.

Question 16

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

Accepted Answer

A)  capital and labor are perfect substitutes.
B)  capital and labor must be used together in a fixed proportion.
C)  capital is not productive.
D)  labor is not productive.

Question 17

Isoquants that are downward-sloping straight lines imply that the inputs

Accepted Answer

A)  are perfect substitutes.
B)  are imperfect substitutes.
C)  cannot be used together.
D)  must be used together in varying proportions.

Question 18

Cobb-Douglas production functions can never possess varying returns to scale.

Accepted Answer

A) True 
 B)False

Question 19

Neutral technical progress allows a firm to

Accepted Answer

A)  produce more output with the same inputs.
B)  use less capital to produce more output.
C)  use less labor to produce more output.
D)  produce the same amount of output with the same inputs.

Question 20

A firm engaging in efficient production, using current technology, ________ produce its current level of production with ________ inputs.

Accepted Answer

A)  could; fewer
B)  cannot; fewer
C)  cannot, more
D)  cannot; different

Exam 5: Production

Isoquants that are downward-sloping straight lines imply that the inputs

Correct Answer
verified

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

Correct Answer
verified

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

Correct Answer
verified

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Correct Answer
verified
The production function below illustrate...
View Answer

Decreasing returns to scale may occur because increasing the amount of inputs used

Correct Answer
verified

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. Show that the marginal productivity of labor diminishes in the short run.

Correct Answer
verified
In the short run, MPL = 0.25 ∗...
View Answer

Which of the following is least likely to be considered an input to production?

Correct Answer
verified

Neutral technical progress allows a firm to

Correct Answer
verified

Correct Answer
verified

Which of the following statements best summarizes the law of diminishing marginal returns?

Correct Answer
verified

A firm that engages in efficient production

Correct Answer
verified

Which of the following is NOT a property of isoquants?

Correct Answer
verified

Suppose the production of DVD players can be represented by the following production function: q = L^0.4K^0.4. Which of the following statements is TRUE?

Correct Answer
verified

-The table in the above figure shows the levels of output resulting from different levels of inputs. At which level of input are there constant returns to scale?

Correct Answer
verified

Explain why labor might not always be a variable input.

Correct Answer
verified
In the real world, units of labor are no...
View Answer

Let the production function be q = AL^aK^b. The function exhibits constant returns to scale if

Correct Answer
verified

A firm engaging in efficient production, using current technology, produce its current level of production with inputs.

Correct Answer
verified

Labor saving nonneutral technical progress allows a firm to

Correct Answer
verified

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons, there are

Correct Answer
verified

Cobb-Douglas production functions can never possess varying returns to scale.

Correct Answer
verified

Exam 5: Production

Isoquants that are downward-sloping straight lines imply that the inputs

Correct AnswerverifiedShow Answer

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

Correct AnswerverifiedShow Answer

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

Correct AnswerverifiedShow Answer

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Correct AnswerverifiedThe production function below illustrate...View AnswerShow Answer

Decreasing returns to scale may occur because increasing the amount of inputs used

Correct AnswerverifiedShow Answer

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Correct AnswerverifiedIn the short run, MPL = 0.25 ∗...View AnswerShow Answer

Which of the following is least likely to be considered an input to production?

Correct AnswerverifiedShow Answer

Neutral technical progress allows a firm to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements best summarizes the law of diminishing marginal returns?

Correct AnswerverifiedShow Answer

A firm that engages in efficient production

Correct AnswerverifiedShow Answer

Which of the following is NOT a property of isoquants?

Correct AnswerverifiedShow Answer

Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

-The table in the above figure shows the levels of output resulting from different levels of inputs. At which level of input are there constant returns to scale?

Correct AnswerverifiedShow Answer

Explain why labor might not always be a variable input.

Correct AnswerverifiedIn the real world, units of labor are no...View AnswerShow Answer

Let the production function be q = ALaKb. The function exhibits constant returns to scale if

Correct AnswerverifiedShow Answer

A firm engaging in efficient production, using current technology, ________ produce its current level of production with ________ inputs.

Correct AnswerverifiedShow Answer

Labor saving nonneutral technical progress allows a firm to

Correct AnswerverifiedShow Answer

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons, there are

Correct AnswerverifiedShow Answer

Cobb-Douglas production functions can never possess varying returns to scale.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The production function below illustrate...
View Answer

Correct Answer
verified

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. Show that the marginal productivity of labor diminishes in the short run.

Correct Answer
verified
In the short run, MPL = 0.25 ∗...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose the production of DVD players can be represented by the following production function: q = L^0.4K^0.4. Which of the following statements is TRUE?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In the real world, units of labor are no...
View Answer

Let the production function be q = AL^aK^b. The function exhibits constant returns to scale if

Correct Answer
verified

A firm engaging in efficient production, using current technology, produce its current level of production with inputs.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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