Question 1

Refer to the following:
The price of capital (r) is $20.
  
-Why wouldn't the firm choose to produce 5,000 units of output with the combination at A?

Accepted Answer

A)  At A, MRTS K / r > MPL / w. 
C)  At A, MPL > MPK. 
D)  both a and b 
E)  none of the above 
A)  At A, MRTS K / r > MPL / w. 
C)  At A, MPL > MPK. 
D)  both a and b 
E)  none of the above

Question 2

Learning economies differ from economies of scale because

Accepted Answer

A)  the former involves rising average costs and the latter involves falling average costs as a result of higher output levels. 
B)  the former involves output in a single period of production and the latter involves cumulative output. 
C)  the former involves cumulative production and the latter involves rate of production per period. 
D)  the first is a short-run phenomenon and the second is a long-run phenomenon. 
A)  the former involves rising average costs and the latter involves falling average costs as a result of higher output levels. 
B)  the former involves output in a single period of production and the latter involves cumulative output. 
C)  the former involves cumulative production and the latter involves rate of production per period. 
D)  the first is a short-run phenomenon and the second is a long-run phenomenon.

Question 3

Refer to the following:
   The price of labor is $15 per unit.
-The minimum cost of producing 1,000 units of output is:

Accepted Answer

A)  $ 150 
B)  $ 450 
C)  $ 600 
D)  $1,800 
E)  none of the above 
A)  $ 150 
B)  $ 450 
C)  $ 600 
D)  $1,800 
E)  none of the above

Question 4

Refer to the following:

A producer is hiring 20 units of labor and 6 units of capital (bundle A).  The price of labor is $10, the price of capital is $2, and at A, the marginal products of labor and capital are both equal to 20.

-Beginning at A, if the producer increases expenditures on labor by $1 and decreases expenditures on capital by $1, then

Accepted Answer

A)  cost remains constant and output decreases by 8 units. 
B)  cost remains constant and output increases by 12 units. 
C)  cost remains constant and output increases by 20 units. 
D)  output remains constant and cost increases by $8. 
E)  output remains constant and cost decreases by $2. 
A)  cost remains constant and output decreases by 8 units. 
B)  cost remains constant and output increases by 12 units. 
C)  cost remains constant and output increases by 20 units. 
D)  output remains constant and cost increases by $8. 
E)  output remains constant and cost decreases by $2.

Question 5

Refer to the following:
   The price of capital is $500 per unit.
-Given a total cost of $50,000, the maximum amount of output possible is

Accepted Answer

A)  500 units of output. 
B)  1,100 units of output. 
C)  10,000 units of output. 
D)  50,000 units of output. 
E)  none of the above 
A)  500 units of output. 
B)  1,100 units of output. 
C)  10,000 units of output. 
D)  50,000 units of output. 
E)  none of the above

Question 6

Refer to the following:
   The price of labor is $15 per unit.
-Which of the following combinations of capital and labor lies on the expansion path?

Accepted Answer

A)  15K, 40L 
B)  18K, 40L 
C)  30K, 100L 
D)  21K, 60L 
E)  none of the above 
A)  15K, 40L 
B)  18K, 40L 
C)  30K, 100L 
D)  21K, 60L 
E)  none of the above

Question 7

Which of the following are characteristics of a typical isoquant?

Accepted Answer

A)  All input combinations on the isoquant will produce the same level of output. 
B)  The marginal rate of technical substitution decreases as more labor is substituted for less capital. 
C)  A change in input prices shifts the isoquant map. 
D)  both a and b 
E)  none of the above 
A)  All input combinations on the isoquant will produce the same level of output. 
B)  The marginal rate of technical substitution decreases as more labor is substituted for less capital. 
C)  A change in input prices shifts the isoquant map. 
D)  both a and b 
E)  none of the above

Question 8

Refer to the following:
Following is a firm's expansion path. The price of capital is $5 per unit; the price of labor is $2 per unit.

$\begin{array}{ccc}
&\text { Optimal Imput Choice }\
\text { Units of Output } & \text { Units of Capital }&\text { Units of Labor } \
10 & 6 &5 \
20 & 8 & 10 \
30 & 13 & 20 \
\end{array}$
-When output is 30 units, what is long-run total cost?

Accepted Answer

A)  $60 
B)  $105 
C)  $150 
D)  $260 
E)  none of the above 
A)  $60 
B)  $105 
C)  $150 
D)  $260 
E)  none of the above

Question 9

Refer to the following:
   The price of capital is $100 per unit.
-What is the marginal rate of technical substitution at point C?

Accepted Answer

A)  0.14 
B)  0.4 
C)  1.4 
D)  4 
E)  none of the above 
A)  0.14 
B)  0.4 
C)  1.4 
D)  4 
E)  none of the above

Question 10

Refer to the following:
The price of capital (r) is $20.
  
-What is the price of labor (w)?

Accepted Answer

A)  $20 
B)  $30 
C)  $25 
D)  $35 
E)  none of the above 
A)  $20 
B)  $30 
C)  $25 
D)  $35 
E)  none of the above

Question 11

Refer to the following:
The price of capital (r) is $20.
  
-What is the lowest possible cost at which 14,000 units of output can be produced?

Accepted Answer

A)  $8,600 
B)  $2,400 
C)  $3,600 
D)  $4,200 
E)  none of the above 
A)  $8,600 
B)  $2,400 
C)  $3,600 
D)  $4,200 
E)  none of the above

Question 12

-The marginal rate of technical substitution at point A is

Accepted Answer

A)  less than 0.25. 
B)  less than 4.0. 
C)  greater than 0.25. 
D)  greater than 4.0. 
A)  less than 0.25. 
B)  less than 4.0. 
C)  greater than 0.25. 
D)  greater than 4.0.

Question 13

Refer to the following figure:
   The price of capital is $50 per unit.
-Which of the following combinations of capital and labor lies on the expansion path?

Accepted Answer

A)  110K, 120L 
B)  60K, 120L 
C)  130K, 200L 
D)  130K, 175L 
A)  110K, 120L 
B)  60K, 120L 
C)  130K, 200L 
D)  130K, 175L

Question 14

If a firm is producing the level of output at which short-run average cost equals long-run average cost, then

Accepted Answer

A)  the firm has chosen the cost-minimizing combination of inputs to produce this level of output. 
B)  with a fixed amount of capital, short-run average cost is greater than long-run average cost at any other level of output. 
C)  the firm has chosen the profit-maximizing level of output. 
D)  both a and b 
E)  all of the above 
A)  the firm has chosen the cost-minimizing combination of inputs to produce this level of output. 
B)  with a fixed amount of capital, short-run average cost is greater than long-run average cost at any other level of output. 
C)  the firm has chosen the profit-maximizing level of output. 
D)  both a and b 
E)  all of the above

Question 15

Refer to the following:
  
-If the firm continues to produce 45 units of output and moves from the combination at A to the combination at B, it must be true that

Accepted Answer

A)  the price of labor decreased relative to the price of capital. 
B)  the price of capital decreased relative to the price of labor. 
C)  the cost of producing 45 units decreased. 
D)  both b and c 
E)  none of these are true 
A)  the price of labor decreased relative to the price of capital. 
B)  the price of capital decreased relative to the price of labor. 
C)  the cost of producing 45 units decreased. 
D)  both b and c 
E)  none of these are true

Question 16

The marginal rate of technical substitution is

Accepted Answer

A)  the rate at which the firm can substitute labor for capital while holding total cost constant. 
B)  the rate at which the firm can substitute labor for capital while holding output constant. 
C)  the slope of the isocost curve. 
D)  both a and c 
E)  none of the above 
A)  the rate at which the firm can substitute labor for capital while holding total cost constant. 
B)  the rate at which the firm can substitute labor for capital while holding output constant. 
C)  the slope of the isocost curve. 
D)  both a and c 
E)  none of the above

Question 17

Refer to the following figure:
   The price of capital is $50 per unit.
-How many units of capital should the firm use to produce 800 units of output at least cost?

Accepted Answer

A)  110 
B)  98 
C)  108 
D)  102 
E)  120 
A)  110 
B)  98 
C)  108 
D)  102 
E)  120

Question 18

Refer to the following figure:
   The price of capital is $50 per unit.
-How many units of labor should the firm use to produce 1,200 units of output at least cost?

Accepted Answer

A)  120 
B)  500 
C)  240 
D)  128 
E)  175 
A)  120 
B)  500 
C)  240 
D)  128 
E)  175

Question 19

Refer to the following figure:
   The price of capital is $50 per unit.
-What is the minimum cost of producing 1,200 units of output?

Accepted Answer

A)  $7,000 
B)  $8,000 
C)  $9,000 
D)  $10,000 
E)  $11,000 
A)  $7,000 
B)  $8,000 
C)  $9,000 
D)  $10,000 
E)  $11,000

Question 20

If a firm is producing the level of output at which long-run average cost equals long-run marginal cost, then

Accepted Answer

A)  long-run marginal cost is at its minimum point. 
B)  long-run average cost is at its minimum point. 
C)  long-run total cost is at its minimum point. 
D)  both a and b 
E)  all of the above 
A)  long-run marginal cost is at its minimum point. 
B)  long-run average cost is at its minimum point. 
C)  long-run total cost is at its minimum point. 
D)  both a and b 
E)  all of the above

Refer to the following: The price of capital (r) is $20. -Why wouldn't the firm choose to produce 5,000 units of output with the combination at A?

Learning economies differ from economies of scale because

Refer to the following: The price of labor is $15 per unit. -The minimum cost of producing 1,000 units of output is:

Refer to the following: The price of capital is $500 per unit. -Given a total cost of $50,000, the maximum amount of output possible is

Refer to the following: The price of labor is $15 per unit. -Which of the following combinations of capital and labor lies on the expansion path?

Which of the following are characteristics of a typical isoquant?

Refer to the following: Following is a firm's expansion path. The price of capital is $5 per unit; the price of labor is $2 per unit. Optimal Imput Choice Units of Output Units of Capital Units of Labor 10 6 5 20 8 10 30 13 20 -When output is 30 units, what is long-run total cost?

Refer to the following: The price of capital is $100 per unit. -What is the marginal rate of technical substitution at point C?

Refer to the following: The price of capital (r) is $20. -What is the price of labor (w)?

Refer to the following: The price of capital (r) is $20. -What is the lowest possible cost at which 14,000 units of output can be produced?

-The marginal rate of technical substitution at point A is

Refer to the following figure: The price of capital is $50 per unit. -Which of the following combinations of capital and labor lies on the expansion path?

If a firm is producing the level of output at which short-run average cost equals long-run average cost, then

Refer to the following: -If the firm continues to produce 45 units of output and moves from the combination at A to the combination at B, it must be true that

The marginal rate of technical substitution is

Refer to the following figure: The price of capital is $50 per unit. -How many units of capital should the firm use to produce 800 units of output at least cost?

Refer to the following figure: The price of capital is $50 per unit. -How many units of labor should the firm use to produce 1,200 units of output at least cost?

Refer to the following figure: The price of capital is $50 per unit. -What is the minimum cost of producing 1,200 units of output?

If a firm is producing the level of output at which long-run average cost equals long-run marginal cost, then

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

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Exam 9: Production and Cost in the Long Run

Refer to the following: The price of capital (r) is $20. -Why wouldn't the firm choose to produce 5,000 units of output with the combination at A?

Learning economies differ from economies of scale because

Refer to the following: The price of labor is $15 per unit. -The minimum cost of producing 1,000 units of output is:

Refer to the following: The price of capital is $500 per unit. -Given a total cost of $50,000, the maximum amount of output possible is

Refer to the following: The price of labor is $15 per unit. -Which of the following combinations of capital and labor lies on the expansion path?

Which of the following are characteristics of a typical isoquant?

Refer to the following: Following is a firm's expansion path. The price of capital is $5 per unit; the price of labor is $2 per unit. Optimal Imput Choice Units of Output Units of Capital Units of Labor 10 6 5 20 8 10 30 13 20 -When output is 30 units, what is long-run total cost?

Refer to the following: The price of capital is $100 per unit. -What is the marginal rate of technical substitution at point C?

Refer to the following: The price of capital (r) is $20. -What is the price of labor (w)?

Refer to the following: The price of capital (r) is $20. -What is the lowest possible cost at which 14,000 units of output can be produced?

-The marginal rate of technical substitution at point A is

Refer to the following figure: The price of capital is $50 per unit. -Which of the following combinations of capital and labor lies on the expansion path?

If a firm is producing the level of output at which short-run average cost equals long-run average cost, then

Refer to the following: -If the firm continues to produce 45 units of output and moves from the combination at A to the combination at B, it must be true that

The marginal rate of technical substitution is

Refer to the following figure: The price of capital is $50 per unit. -How many units of capital should the firm use to produce 800 units of output at least cost?

Refer to the following figure: The price of capital is $50 per unit. -How many units of labor should the firm use to produce 1,200 units of output at least cost?

Refer to the following figure: The price of capital is $50 per unit. -What is the minimum cost of producing 1,200 units of output?

If a firm is producing the level of output at which long-run average cost equals long-run marginal cost, then

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters