Question 1

The slope of an isoquant is equal to

Accepted Answer

A)  the marginal rate of substitution 
B)  the marginal rate of technical substitution 
C)  the rate of diminishing marginal utility 
D)  the rate of diminishing marginal returns 
E)  economies of scale 
A)  the marginal rate of substitution 
B)  the marginal rate of technical substitution 
C)  the rate of diminishing marginal utility 
D)  the rate of diminishing marginal returns 
E)  economies of scale B

Question 2

Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. Giving up one hour of labor makes it possible for Manny Motors to afford

Accepted Answer

A)  4 fewer robot hours 
B)  3/5 more robot hours 
C)  1-2/3 more robot hours 
D)  3 million more robot hours 
E)  5 million more robot hours 
A)  4 fewer robot hours 
B)  3/5 more robot hours 
C)  1-2/3 more robot hours 
D)  3 million more robot hours 
E)  5 million more robot hours C

Question 3

An isoquant shows the possible combinations of two

Accepted Answer

A)  products that yield the same social utility 
B)  products that can be produced after an improvement in technology 
C)  products that can be produced using the constant amount of resources available 
D)  resources that involve an identical total cost 
E)  resources that produce an identical quantity of the product 
A)  products that yield the same social utility 
B)  products that can be produced after an improvement in technology 
C)  products that can be produced using the constant amount of resources available 
D)  resources that involve an identical total cost 
E)  resources that produce an identical quantity of the product E

Question 4

Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. The horizontal (labor) intercept of the isocost line is 3 million, and the vertical (robot) intercept is 5 million. Which of the following best describes what would happen to the isocost line if the price of robot hours decreased?

Accepted Answer

A)  It would shift to the right. 
B)  It would rotate outward along the horizontal axis. 
C)  It would rotate inward along the horizontal axis. 
D)  It would rotate outward along the vertical axis. 
E)  It would rotate inward along the vertical axis. 
A)  It would shift to the right. 
B)  It would rotate outward along the horizontal axis. 
C)  It would rotate inward along the horizontal axis. 
D)  It would rotate outward along the vertical axis. 
E)  It would rotate inward along the vertical axis.

Question 5

Exhibit 7-23 Production Isoquants ans Isocosts  
-In terms of output produced, which of the following expresses the relationships illustrated in Exhibit 7-23?

Accepted Answer

A)  A > B > C 
B)  A = B > C 
C)  B > C > A 
D)  A = B = C 
E)  B' > C = A 
A)  A > B > C 
B)  A = B > C 
C)  B > C > A 
D)  A = B = C 
E)  B' > C = A

Question 6

Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. Giving up one hour of robot operation makes it possible for Manny Motors to afford

Accepted Answer

A)  4 fewer labor hours 
B)  3/5 of an additional labor hour 
C)  4 more labor hours 
D)  3 million more labor hours 
E)  5 million more labor hours 
A)  4 fewer labor hours 
B)  3/5 of an additional labor hour 
C)  4 more labor hours 
D)  3 million more labor hours 
E)  5 million more labor hours

Question 7

Exhibit 7-21  
-For the three isocost lines shown in Exhibit 7-21 which of the following is true:

Accepted Answer

A)  the ratio of the price of labor to the price of capital increases as the isocost lines get farther from the origin 
B)  the ratio of the price of labor to the price of capital gets smaller as the isocost lines ge farther from the origin 
C)  the ratio of the price of labor to the price of capital is the same 
D)  the wage rate gets larger as the isocost lines get farther from the origin 
E)  the price of capital gets larger as the isocost lines get farther from the origin 
A)  the ratio of the price of labor to the price of capital increases as the isocost lines get farther from the origin 
B)  the ratio of the price of labor to the price of capital gets smaller as the isocost lines ge farther from the origin 
C)  the ratio of the price of labor to the price of capital is the same 
D)  the wage rate gets larger as the isocost lines get farther from the origin 
E)  the price of capital gets larger as the isocost lines get farther from the origin

Question 8

-Which of the following is true of point a in Exhibit 7-17?

Accepted Answer

A)  The MRTS of labor for capital is equal to the ratio of the wage rate to the price of capital. 
B)  The MRTS of labor for capital is less than the ratio of the wage rate to the price of capital. 
C)  The firm would be producing its output at the lowest possible cost. 
D)  The MRTS of labor for capital is greater than the ratio of the wage rate to the price of capital. 
E)  The ratio of the marginal product of labor to the price of capital is equal to the ratio of the wage rate to the price of capital. 
A)  The MRTS of labor for capital is equal to the ratio of the wage rate to the price of capital. 
B)  The MRTS of labor for capital is less than the ratio of the wage rate to the price of capital. 
C)  The firm would be producing its output at the lowest possible cost. 
D)  The MRTS of labor for capital is greater than the ratio of the wage rate to the price of capital. 
E)  The ratio of the marginal product of labor to the price of capital is equal to the ratio of the wage rate to the price of capital.

Question 9

Exhibit 7-21  
-Connecting points g, h, and i in Exhibit 7-21 yields the firm's

Accepted Answer

A)  marginal rate of substitution 
B)  isocost line 
C)  marginal cost curve 
D)  expansion path 
E)  total revenue line 
A)  marginal rate of substitution 
B)  isocost line 
C)  marginal cost curve 
D)  expansion path 
E)  total revenue line

Question 10

The horizontal (labor) intercept of Manny Motors' isocost line is 3 million, and the vertical (robot) intercept is 5 million. Which of the following best describes what would happen to the isocost line if Manny Motors' operating budget increased?

Accepted Answer

A)  It would shift rightward to a parallel position. 
B)  It would shift rightward to a nonparallel position. 
C)  It would shift leftward to a parallel position. 
D)  It would shift leftward to a nonparallel position. 
E)  Nothing. 
A)  It would shift rightward to a parallel position. 
B)  It would shift rightward to a nonparallel position. 
C)  It would shift leftward to a parallel position. 
D)  It would shift leftward to a nonparallel position. 
E)  Nothing.

Question 11

Upon opening a printing and copy shop, a firm budgets $40,000 for copy machines and labor. If the price of labor is $4 per hour and the firm can afford to operate its copy machine for 2,000 hours if no labor is hired, how many additional hours of labor could the firm hire if it gave up one hour of copy machine time?

Accepted Answer

A)  5/8 
B)  2 
C)  1/5 
D)  5 
E)  1/4 
A)  5/8 
B)  2 
C)  1/5 
D)  5 
E)  1/4

Question 12

Exhibit 7-19  
-In Exhibit 7-19, the rotation from AC to AB reflects a(n)

Accepted Answer

A)  increase in the price of labor 
B)  increase in the price of land 
C)  decrease in the price of labor 
D)  decrease in the price of land 
E)  increase in the amount the producer can spend 
A)  increase in the price of labor 
B)  increase in the price of land 
C)  decrease in the price of labor 
D)  decrease in the price of land 
E)  increase in the amount the producer can spend

Question 13

Upon opening a printing and copy shop, a firm budgets $30,000 for copy machines and labor. If the price of labor is $30 per hour, what is the horizontal intercept of the isocost line when labor is measured on the horizontal axis?

Accepted Answer

A)  75 hours 
B)  1,000 hours 
C)  90,000 hours 
D)  300,000 hours 
E)  It is impossible to tell from the information given. 
A)  75 hours 
B)  1,000 hours 
C)  90,000 hours 
D)  300,000 hours 
E)  It is impossible to tell from the information given.

Question 14

Exhibit 7-18  
-Consider Exhibit 7-18. The rotation from AB to AC reflects a(n)

Accepted Answer

A)  increase in the price of labor 
B)  increase in the price of land 
C)  decrease in the price of labor 
D)  decrease in the price of land 
E)  increase in the amount the producer can spend 
A)  increase in the price of labor 
B)  increase in the price of land 
C)  decrease in the price of labor 
D)  decrease in the price of land 
E)  increase in the amount the producer can spend

Question 15

Upon opening a printing and copy shop, a firm budgets $40,000 for copy machines and labor. The firm can operate its copy machine for 2,000 hours if it hires no labor. What is the cost of operating a copy machine for one hour?

Accepted Answer

A)  12.5 cents 
B)  $1.25 
C)  $12 
D)  $20 
E)  It is impossible to tell from the information given. 
A)  12.5 cents 
B)  $1.25 
C)  $12 
D)  $20 
E)  It is impossible to tell from the information given.

Question 16

Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. The horizontal (labor) intercept of the isocost line is 3 million and the vertical (robot) intercept isocost line is 5 million. If Manny Motors' operating budget became $120 million, the vertical intercept would become

Accepted Answer

A)  6 million labor hours 
B)  20 million labor hours 
C)  10 million robot hours 
D)  20 million robot hours 
E)  $120 million 
A)  6 million labor hours 
B)  20 million labor hours 
C)  10 million robot hours 
D)  20 million robot hours 
E)  $120 million

Question 17

All combinations of inputs along an isocost line represent the same total output.

Accepted Answer

A) True 
 B)False

Question 18

A reduction in a firm's operating budget is represented as a shift of its isocost line inward to a parallel position.

Accepted Answer

A) True 
 B)False

Question 19

At each point on an isoquant, the marginal rate of technical substitution (MRTS) of labor for capital is equal to the marginal product of labor divided by the marginal product of capital.

Accepted Answer

A) True 
 B)False

Question 20

Starting from a point of tangency between an isoquant and an isocost line, a movement along the isoquant will

Accepted Answer

A)  increase output but have no effect on cost 
B)  decrease output but have no effect on cost 
C)  increase both output and cost 
D)  have no effect on output but increase cost 
E)  have no effect on output but decrease cost 
A)  increase output but have no effect on cost 
B)  decrease output but have no effect on cost 
C)  increase both output and cost 
D)  have no effect on output but increase cost 
E)  have no effect on output but decrease cost

Exam 7: Appendix: a Closer Look at Production and Cost

The slope of an isoquant is equal to

Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. Giving up one hour of labor makes it possible for Manny Motors to afford

An isoquant shows the possible combinations of two

Exhibit 7-23 Production Isoquants ans Isocosts -In terms of output produced, which of the following expresses the relationships illustrated in Exhibit 7-23?

Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. Giving up one hour of robot operation makes it possible for Manny Motors to afford

Exhibit 7-21 -For the three isocost lines shown in Exhibit 7-21 which of the following is true:

-Which of the following is true of point a in Exhibit 7-17?

Exhibit 7-21 -Connecting points g, h, and i in Exhibit 7-21 yields the firm's

The horizontal (labor) intercept of Manny Motors' isocost line is 3 million, and the vertical (robot) intercept is 5 million. Which of the following best describes what would happen to the isocost line if Manny Motors' operating budget increased?

Exhibit 7-19 -In Exhibit 7-19, the rotation from AC to AB reflects a(n)

Upon opening a printing and copy shop, a firm budgets $30,000 for copy machines and labor. If the price of labor is $30 per hour, what is the horizontal intercept of the isocost line when labor is measured on the horizontal axis?

Exhibit 7-18 -Consider Exhibit 7-18. The rotation from AB to AC reflects a(n)

Upon opening a printing and copy shop, a firm budgets $40,000 for copy machines and labor. The firm can operate its copy machine for 2,000 hours if it hires no labor. What is the cost of operating a copy machine for one hour?

All combinations of inputs along an isocost line represent the same total output.

A reduction in a firm's operating budget is represented as a shift of its isocost line inward to a parallel position.

At each point on an isoquant, the marginal rate of technical substitution (MRTS) of labor for capital is equal to the marginal product of labor divided by the marginal product of capital.

Starting from a point of tangency between an isoquant and an isocost line, a movement along the isoquant will

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix: price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix: Indifference Curves and Utility Maximization

Production and Cost in the Firm

A: perfect Competition

B: perfect Competition

A: monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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