Question 1

In the 1890s nearly 50 percent of the Canadian population worked on a farm.Today,that number is less than 2 percent.One important explanation for this change is

Accepted Answer

A) the response to a rising price of labour and a falling relative price of capital. 
B) the response to a rising price of capital and a falling relative price of labour. 
C) that over long periods of time,labour is always replaced by capital. 
D) that over long periods of time,capital is always replaced by labour. 
E) that the marginal product of labour was falling over time while the marginal product of capital was rising. 
A) the response to a rising price of labour and a falling relative price of capital. 
B) the response to a rising price of capital and a falling relative price of labour. 
C) that over long periods of time,labour is always replaced by capital. 
D) that over long periods of time,capital is always replaced by labour. 
E) that the marginal product of labour was falling over time while the marginal product of capital was rising.

Question 2

Suppose that capital costs $10 per unit and labour costs $4 per unit.If the marginal product of capital is 50 and the marginal product of labour is 50,the firm should in order to minimize its costs of producing its output.

Accepted Answer

A) employ more capital and labour 
B) employ less capital and labour 
C) employ more capital and less labour 
D) employ less capital and more labour 
E) not change its current factor use 
A) employ more capital and labour 
B) employ less capital and labour 
C) employ more capital and less labour 
D) employ less capital and more labour 
E) not change its current factor use

Question 3

In the long run,a profit-maximizing firm producing a given level of output chooses the production method that

Accepted Answer

A) produces that output at the lowest possible cost. 
B) maximizes the marginal product of all factors. 
C) maximizes the marginal product of labour. 
D) leads to a flat total cost curve. 
E) minimizes labour input. 
A) produces that output at the lowest possible cost. 
B) maximizes the marginal product of all factors. 
C) maximizes the marginal product of labour. 
D) leads to a flat total cost curve. 
E) minimizes labour input.

Question 4

Which of the following cost curves demonstrate increasing returns to scale?

Accepted Answer

A) a downward-sloping long-run average cost curve 
B) an upward-sloping long-run average cost curve 
C) a horizontal long-run average cost curve 
D) a vertical long-run average cost curve 
E) returns to scale have nothing to do with the shape of the long-run average cost curve 
A) a downward-sloping long-run average cost curve 
B) an upward-sloping long-run average cost curve 
C) a horizontal long-run average cost curve 
D) a vertical long-run average cost curve 
E) returns to scale have nothing to do with the shape of the long-run average cost curve

Question 5

Canada has a much lower population density than does Japan.Therefore,the price of land (relative to the price of labour)is lower in Canada than in Japan.Consider a Canadian firm and a Japanese firm,both producing rice,both having access to the same technologies,and both striving to minimize their costs.The Canadian firm will use the two inputs,land and labour,in such a way that its land/labour ratio is

Accepted Answer

A) equal to that of the Japanese firm. 
B) lower than that of the Japanese firm. 
C) higher than that of the Japanese firm. 
D) equal to one. 
E) indeterminate as there is insufficient information to know. 
A) equal to that of the Japanese firm. 
B) lower than that of the Japanese firm. 
C) higher than that of the Japanese firm. 
D) equal to one. 
E) indeterminate as there is insufficient information to know.

Question 6

A firmʹs least-cost position for producing a given output level occurs at that point where

Accepted Answer

A) the isocost line intersects the highest isoquant. 
B) the isocost and isoquant intersect the horizontal axis. 
C) the isoquant is closest to the origin. 
D) the isocost line and the isoquant are tangent to each other. 
E) the isocost and isoquant intersect the vertical axis. 
A) the isocost line intersects the highest isoquant. 
B) the isocost and isoquant intersect the horizontal axis. 
C) the isoquant is closest to the origin. 
D) the isocost line and the isoquant are tangent to each other. 
E) the isocost and isoquant intersect the vertical axis.

Question 7

For a firm with only two inputs,capital and labour,the condition MPK/MPL = PK/PL guarantees that the firm is

Accepted Answer

A) at its profit-maximizing output but is not necessarily minimizing its costs. 
B) minimizing its costs but is not necessarily maximizing its profits. 
C) technically efficient but not economically efficient. 
D) economically efficient but not technically efficient. 
E) at its profit-maximizing and cost-minimizing level of output. 
A) at its profit-maximizing output but is not necessarily minimizing its costs. 
B) minimizing its costs but is not necessarily maximizing its profits. 
C) technically efficient but not economically efficient. 
D) economically efficient but not technically efficient. 
E) at its profit-maximizing and cost-minimizing level of output.

Question 8

Which of the following statements concerning long-run and short-run cost curves is correct?

Accepted Answer

A) A short-run average cost curve can fall below the long-run average cost curve. 
B) The short-run average cost curve is tangent to the long-run average cost curve for all levels of output of the fixed factor. 
C) The long-run average cost curve envelops a whole family of short-run marginal cost curves. 
D) The minimum point of the long-run average cost curve will correspond to the minimum point on a single short-run average cost curve. 
E) Both the long-run and short-run average cost curves show the lowest cost of producing any output when all factors are variable. 
A) A short-run average cost curve can fall below the long-run average cost curve. 
B) The short-run average cost curve is tangent to the long-run average cost curve for all levels of output of the fixed factor. 
C) The long-run average cost curve envelops a whole family of short-run marginal cost curves. 
D) The minimum point of the long-run average cost curve will correspond to the minimum point on a single short-run average cost curve. 
E) Both the long-run and short-run average cost curves show the lowest cost of producing any output when all factors are variable.

In the 1890s nearly 50 percent of the Canadian population worked on a farm.Today,that number is less than 2 percent.One important explanation for this change is

Suppose that capital costs $10 per unit and labour costs $4 per unit.If the marginal product of capital is 50 and the marginal product of labour is 50,the firm should in order to minimize its costs of producing its output.

In the long run,a profit-maximizing firm producing a given level of output chooses the production method that

Which of the following cost curves demonstrate increasing returns to scale?

A firmʹs least-cost position for producing a given output level occurs at that point where

For a firm with only two inputs,capital and labour,the condition MPK/MPL = PK/PL guarantees that the firm is

Which of the following statements concerning long-run and short-run cost curves is correct?

Economic Issues and Concepts

Economic Theories, data, and Graphs

Demand, supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 8: Producers in the Long Run

In the 1890s nearly 50 percent of the Canadian population worked on a farm.Today,that number is less than 2 percent.One important explanation for this change is

Suppose that capital costs $10 per unit and labour costs $4 per unit.If the marginal product of capital is 50 and the marginal product of labour is 50,the firm should in order to minimize its costs of producing its output.

In the long run,a profit-maximizing firm producing a given level of output chooses the production method that

Which of the following cost curves demonstrate increasing returns to scale?

A firmʹs least-cost position for producing a given output level occurs at that point where

For a firm with only two inputs,capital and labour,the condition MPK/MPL = PK/PL guarantees that the firm is

Which of the following statements concerning long-run and short-run cost curves is correct?

Economic Issues and Concepts

Economic Theories, data, and Graphs

Demand, supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Exchange Rates and the Balance of Payments

Filters