Exam 6: Production

The textbook discusses the carpet industry situated in the southeastern U.S., and the authors indicate that smaller carpet mills have ________ returns to scale while larger mills have ________ returns to scale.

A straight-line isoquant

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

A production function defines the output that can be produced

Which of the following is NOT related to the slope of isoquants?

Two isoquants, which represent different output levels but are derived from the same production function, cannot cross because

If the isoquants in an isoquant map are downward sloping but bowed away from the origin (i.e., concave to the origin), then the production technology violates the assumption of:

If the isoquants are straight lines, then

When labor usage is at 12 units, output is 36 units. From this we may infer that

Laura's Internet Services firm can design computer systems according to the function y(K, L) = , 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 L= 1, 2, 3, 4, and 5, if she increases her gigabyte storage capacity to 216.

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

In a production process, all inputs are increased by 10%; but output increases less than 10%. This means that the firm experiences

As an economy recovers from a recession, the observed level of labor productivity tends to decline. Why?

The link between the productivity of labor and the standard of living is

According to the law of diminishing returns

Which of the following inputs are variable in the long run?

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

Some economists conduct empirical research on the theory of the firm by measuring the degree of technical efficiency achieved by actual firms. What type of research contributions are provided by these studies?

If capital is measured on the vertical axis and labor is measured on the horizontal axis, the slope of an isoquant can be interpreted as the

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.