Question 1

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L0.5.   The average product of labor for L = 3 is ____.

Accepted Answer

A)  1 
B)  0.705 
C)  0.577 
D)  0.5 
A)  1 
B)  0.705 
C)  0.577 
D)  0.5

Question 2

(Table: Capital and Labor III) What is the equation for this firm's production function?

Accepted Answer

A)  Q = 100KL 
B)  Q = 100K0.5L0.5 
C)  Q = 100K0.25L0.75 
D)  Q = 100K2L 
A)  Q = 100KL 
B)  Q = 100K0.5L0.5 
C)  Q = 100K0.25L0.75 
D)  Q = 100K2L

Question 3

Suppose the production function for a car manufacturer is:
Q = 2K2L2
Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Accepted Answer

A)  4K2L 
B)  4KL2 
C)  4KL 
D)  KL-1 
A)  4K2L 
B)  4KL2 
C)  4KL 
D)  KL-1

Question 4

Capital cannot be adjusted in the short run because:

Accepted Answer

A)  there is not sufficient time to adjust it. 
B)  it is too expensive to alter the capital stock. 
C)  capital markets do not function well enough in the short run. 
D)  the firm has yet to decide what product to produce, so it does not yet know what kind of capital it needs. 
A)  there is not sufficient time to adjust it. 
B)  it is too expensive to alter the capital stock. 
C)  capital markets do not function well enough in the short run. 
D)  the firm has yet to decide what product to produce, so it does not yet know what kind of capital it needs.

Question 5

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by ½(K/L)1/2 and ½(L/K)1/2, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

Accepted Answer

A)  decrease by 50%. 
B)  double. 
C)  increase by 50%. 
D)  increase fivefold. 
A)  decrease by 50%. 
B)  double. 
C)  increase by 50%. 
D)  increase fivefold.

Question 6

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L0.5.   
a. Calculate the average product of labor for L = 1, L = 2, and L = 3.
b. Calculate the marginal product of labor for L = 1, L = 4, and L = 16, assuming that labor is infinitely divisible.

Accepted Answer

a. AP_L = Q/L AP_L (L = 1) = 1/1 = 1 AP_L (L =

Question 7

Suppose that a firm's production function is given by Q = KL (MPK = L and MPL = K), where Q is quantity of output, K is units of capital, and L is units of labor. The price per unit of labor and capital are $30 and $20, respectively.
a. How many units of labor and capital should the firm use if it wants to minimize the cost of producing 600 units of output?
b. Suppose that the firm makes a technological change, transforming its production function to Q = 1.23KL (MPK = 1.23L and MPL = 1.23K). What is the minimum cost of producing 600 units of output?

Accepted Answer

a. Set @#IMG-DLM& . @#IMG-DLM& K = 1.5L (substitute into pro

Question 8

Suppose the firm's production function is Q = 2KL, where Q is units of output, K is units of capital (which are fixed at 2), and L is units of labor.
​
a. Graph the firm's short-run production function.
b. Graph the firm's APL and MPL functions.
c. Does this firm have diminishing marginal returns? Explain your answer.

Accepted Answer

a. The firm's production function is Q =

Question 9

(Figure: Capital and Labor X) Which of the following statements is (are) TRUE?   I. The firm minimizes the cost of producing 10,000 units of output at point C.
II) If the firm chooses an input combination that lies on C3, the firm will be able to produce 10,000 units of output at a lower cost than at point A.
III) The cost of producing 10,000 units of output is greater at point B than at point A.

Accepted Answer

A)  I and III 
B)  II and III 
C)  I 
D)  I, II, and III 
A)  I and III 
B)  II and III 
C)  I 
D)  I, II, and III

Question 10

(Figure: Capital and Labor XIII) A technological change is represented by the movement from point _____ to point _____.

Accepted Answer

A)  X; Z 
B)  Z; X 
C)  W; Z 
D)  Z; W 
A)  X; Z 
B)  Z; X 
C)  W; Z 
D)  Z; W

Question 11

Which of the following production functions exhibit(s) constant returns to scale?
I. Q =  
II. Q = 2K + L
III. Q = K0.8L0.2

Accepted Answer

A)  II and III 
B)  I and II 
C)  III 
D)  I, II, and III 
A)  II and III 
B)  I and II 
C)  III 
D)  I, II, and III

Question 12

(Figure: Capital and Labor XVI) The cost-minimizing combination of capital and labor to produce 10 units of output is _____ and _____, respectively, given prices of $10 and $50, respectively. What is the total cost?

Accepted Answer

To determine the cost-minimizing level o

Question 13

(Table: Capital and Labor I) Which of the following statements is (are) TRUE?

Accepted Answer

A)  At L = 1, marginal product is greater than average product. 
B)  At L = 3, the quantity of output produced per unit of labor is 82.2. 
C)  The additional output produced by using the second unit of labor is 86.6. 
D)  At L = 2, the APL = L/Q = 186.6. 
A)  At L = 1, marginal product is greater than average product. 
B)  At L = 3, the quantity of output produced per unit of labor is 82.2. 
C)  The additional output produced by using the second unit of labor is 86.6. 
D)  At L = 2, the APL = L/Q = 186.6.

Question 14

Suppose the production function for a car manufacturer is:
Q = 2K2L2
Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of capital is ____.

Accepted Answer

A)  4K2L 
B)  4KL2 
C)  4KL 
D)  KL-1 
A)  4K2L 
B)  4KL2 
C)  4KL 
D)  KL-1

Question 15

Suppose the production function for a bakery is:
Q = 4K0.4L0.6
where Q is the number of loaves of bread produced per day, K is the number of ovens, and L is the number of workers employed.
a. Suppose that the wage rate is $5 per hour and the rental rate of capital is $10 per hour. If the bakery wants to produce 4,000 loaves of bread, what is the cost-minimizing bundle of capital and labor?
b. Derive the firm's expansion path.

Accepted Answer

a. First, we set up the firm's cost mini

Question 16

(Figure: Capital and Labor IV) Which of the following statements is (are) TRUE?

Accepted Answer

A)  It is easier for a small amount of additional labor to replace a large amount of capital at point A than at point B. 
B)  It is easier for a small amount of additional labor to replace a large amount of capital at point B than at point A. 
C)  The MRTSLK at point A equals MPK/MPL. 
D)  The MRTSLK at point B is greater than MRTSLK at point A. 
A)  It is easier for a small amount of additional labor to replace a large amount of capital at point A than at point B. 
B)  It is easier for a small amount of additional labor to replace a large amount of capital at point B than at point A. 
C)  The MRTSLK at point A equals MPK/MPL. 
D)  The MRTSLK at point B is greater than MRTSLK at point A.

Question 17

(Table: Capital and Labor XIV) Consider the production function that this table shows.   Suppose the firm is using 2 units of capital and 1 unit of labor. The marginal product of capital for K = 3 is ____.

Accepted Answer

A)  41.42 
B)  40.24 
C)  31.78 
D)  26.79 
A)  41.42 
B)  40.24 
C)  31.78 
D)  26.79

Question 18

A company has the production function Q = min{K, L}. The price of capital is $50 per unit while the price of labor is $75 per unit. On a graph, plot isoquants for quantities 10, 20, and 30, as well as the isocost line for a quantity of 20. Note the cost-minimizing levels of capital and labor on your graph given the target production level of 20 units.

Accepted Answer

To plot the isoquants, set Q equal to ea

Question 19

Suppose that a hot dog vendor uses a cart (K) and his time (L) to make and sell hot dogs. The vendor's production function is   
, where Q is the number of hot dogs per day. Suppose that the rental on hot dog carts is $50 per day and that the vendor wants to produce 500 hot dogs per day. Use calculus to: 
a. derive the demand for labor.
b. show that the demand for labor satisfies the law of demand.

Accepted Answer

"a. The hot dog vendor solves the follow

Question 20

(Figure: Production Function II) Which of the following statements are TRUE?   I. This production function exhibits diminishing marginal product.
II) At L = 3, MPL = 1.88 and APL = 4.
III) At L = 6, APL > MPL.
IV) At L = 3, MPL = 4 and APL = 1.88.

Accepted Answer

A)  II and III 
B)  I, II, and III 
C)  I, III, and IV 
D)  I and II 
A)  II and III 
B)  I, II, and III 
C)  I, III, and IV 
D)  I and II

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L^0.5. The average product of labor for L = 3 is ____.

(Table: Capital and Labor III) What is the equation for this firm's production function?

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Capital cannot be adjusted in the short run because:

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by ½(K/L)^1/2 and ½(L/K)^1/2, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L^0.5. a. Calculate the average product of labor for L = 1, L = 2, and L = 3. b. Calculate the marginal product of labor for L = 1, L = 4, and L = 16, assuming that labor is infinitely divisible.

(Figure: Capital and Labor XIII) A technological change is represented by the movement from point _ to point _.

Which of the following production functions exhibit(s) constant returns to scale? I. Q = II. Q = 2K + L III. Q = K^0.8L^0.2

(Figure: Capital and Labor XVI) The cost-minimizing combination of capital and labor to produce 10 units of output is _ and _, respectively, given prices of $10 and $50, respectively. What is the total cost?

(Table: Capital and Labor I) Which of the following statements is (are) TRUE?

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of capital is ____.

(Figure: Capital and Labor IV) Which of the following statements is (are) TRUE?

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 2 units of capital and 1 unit of labor. The marginal product of capital for K = 3 is ____.

(Figure: Production Function II) Which of the following statements are TRUE? I. This production function exhibits diminishing marginal product. II) At L = 3, MP_L = 1.88 and AP_L = 4. III) At L = 6, AP_L > MP_L. IV) At L = 3, MP_L = 4 and AP_L = 1.88.

Adventures in Microeconomics

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Exam 6: Producer Behavior

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L0.5. The average product of labor for L = 3 is ____.

(Table: Capital and Labor III) What is the equation for this firm's production function?

Suppose the production function for a car manufacturer is: Q = 2K2L2 Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Capital cannot be adjusted in the short run because:

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by ½(K/L)1/2 and ½(L/K)1/2, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L0.5. a. Calculate the average product of labor for L = 1, L = 2, and L = 3. b. Calculate the marginal product of labor for L = 1, L = 4, and L = 16, assuming that labor is infinitely divisible.

(Figure: Capital and Labor XIII) A technological change is represented by the movement from point _____ to point _____.

Which of the following production functions exhibit(s) constant returns to scale? I. Q = II. Q = 2K + L III. Q = K0.8L0.2

(Figure: Capital and Labor XVI) The cost-minimizing combination of capital and labor to produce 10 units of output is _____ and _____, respectively, given prices of $10 and $50, respectively. What is the total cost?

(Table: Capital and Labor I) Which of the following statements is (are) TRUE?

Suppose the production function for a car manufacturer is: Q = 2K2L2 Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of capital is ____.

(Figure: Capital and Labor IV) Which of the following statements is (are) TRUE?

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 2 units of capital and 1 unit of labor. The marginal product of capital for K = 3 is ____.

(Figure: Production Function II) Which of the following statements are TRUE? I. This production function exhibits diminishing marginal product. II) At L = 3, MPL = 1.88 and APL = 4. III) At L = 6, APL > MPL. IV) At L = 3, MPL = 4 and APL = 1.88.

Adventures in Microeconomics

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L^0.5. The average product of labor for L = 3 is ____.

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by ½(K/L)^1/2 and ½(L/K)^1/2, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L^0.5. a. Calculate the average product of labor for L = 1, L = 2, and L = 3. b. Calculate the marginal product of labor for L = 1, L = 4, and L = 16, assuming that labor is infinitely divisible.

(Figure: Capital and Labor XIII) A technological change is represented by the movement from point _ to point _.

Which of the following production functions exhibit(s) constant returns to scale? I. Q = II. Q = 2K + L III. Q = K^0.8L^0.2

(Figure: Capital and Labor XVI) The cost-minimizing combination of capital and labor to produce 10 units of output is _ and _, respectively, given prices of $10 and $50, respectively. What is the total cost?

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of capital is ____.

(Figure: Production Function II) Which of the following statements are TRUE? I. This production function exhibits diminishing marginal product. II) At L = 3, MP_L = 1.88 and AP_L = 4. III) At L = 6, AP_L > MP_L. IV) At L = 3, MP_L = 4 and AP_L = 1.88.