Question 1

Suppose a firm's short-run production function is given by Q = 16L0.8. What is the marginal product of the fourth worker?

Accepted Answer

A)  36 
B)  10 
C)  49 
D)  1.85 
A)  36 
B)  10 
C)  49 
D)  1.85

Question 2

Answer the following questions.
a. At Dippy's Amusement Park, it takes two workers to operate an amusement park ride. Each amusement park ride is capable of providing 400 rides per day. Draw the production isoquant corresponding to 2,000 amusement park rides.
b. Draw two production isoquants: one showing that labor and capital are close substitutes and the other showing that labor and capital are not close substitutes.
c. Draw a production isoquant corresponding to the production function Q = 2K + L.

Accepted Answer

a. @#IMG-DLM& 
b. @#IMG-DLM& 
c. MRTS =

Question 3

Answer the following questions.
a. Mathematically, why would the average product of labor decrease as a firm hires more workers?
b. If capital inputs cannot be adjusted, what must eventually happen to the marginal product of labor as the firm hires more workers?
c. Graph a production function that exhibits diminishing marginal product of labor.

Accepted Answer

a. For AP_L to decrease, MP_L must

Question 4

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. The function for the marginal rate of technical substitution is ____.

Accepted Answer

A)  2.4K0.4L-0.4 
B)  1.6K-0.6L0.6 
C)  KL 
D)  (3/2)KL-1 
A)  2.4K0.4L-0.4 
B)  1.6K-0.6L0.6 
C)  KL 
D)  (3/2)KL-1

Question 5

Which of the following statements best exemplifies the firm's constrained minimization problem?

Accepted Answer

A)  The firm desires to produce a given quantity of output by choosing values of W and R that minimize RK + WL. 
B)  The firm desires to minimize output subject to the constraint that C = RK + WL. 
C)  The firm desires to produce as much output as possible by choosing values of L and K that minimize RK + WL. 
D)  The firm desires to produce a given quantity of output by choosing values of L and K that minimize RK + WL. 
A)  The firm desires to produce a given quantity of output by choosing values of W and R that minimize RK + WL. 
B)  The firm desires to minimize output subject to the constraint that C = RK + WL. 
C)  The firm desires to produce as much output as possible by choosing values of L and K that minimize RK + WL. 
D)  The firm desires to produce a given quantity of output by choosing values of L and K that minimize RK + WL.

Question 6

A basic assumption of production is that the firm:

Accepted Answer

A)  cannot borrow money to finance its input expenditures. 
B)  can buy as much labor and capital as it desires at fixed prices. 
C)  must bid up the prices of labor and capital in order to produce more output. 
D)  has a downward-sloping budget constraint. 
A)  cannot borrow money to finance its input expenditures. 
B)  can buy as much labor and capital as it desires at fixed prices. 
C)  must bid up the prices of labor and capital in order to produce more output. 
D)  has a downward-sloping budget constraint.

Question 7

Which of the following is (are) example(s) of production functions?
I. Q = 56K + 18L
II. Q = 2K0.8L0.2
III. Q = KL

Accepted Answer

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

Question 8

The production function for a firm is Q = min(2K, L). The price per unit of capital is $40, and the price per unit of labor is $60.
a. What is the minimum cost of producing 10 units of output?
b. Using an isoquant and isocost line, illustrate the cost-minimizing input choice of the firm producing 10 units of output.

Accepted Answer

a. Q = 2K = L
10 = 2

Question 9

Which situation will likely give rise to diminishing marginal product of labor?

Accepted Answer

A)  Plasma television manufacturers are going out of business because of increased competition from LCD televisions. 
B)  Hell's Kitchen, which has enough counter space for three cooks per shift, decides to hire a fourth cook per shift. 
C)  Nevaeh's Kitchen undertakes a massive expansion, doubling both the size of its kitchen and number of cooks. 
D)  A landscaping firm replaces all of its self-propelled lawnmowers with push mowers. 
A)  Plasma television manufacturers are going out of business because of increased competition from LCD televisions. 
B)  Hell's Kitchen, which has enough counter space for three cooks per shift, decides to hire a fourth cook per shift. 
C)  Nevaeh's Kitchen undertakes a massive expansion, doubling both the size of its kitchen and number of cooks. 
D)  A landscaping firm replaces all of its self-propelled lawnmowers with push mowers.

Question 10

(Table: Capital and Labor II) Which of the following statements is (are) TRUE?   I. A combination of 4 units of capital and 2 units of labor produces the same amount of output as a combination of 3 units of capital and 3 units of labor.
II) If labor is fixed at 3 units, adding more capital increases output at an increasing rate.
III) If capital is fixed at 2 units, adding more labor results in diminishing returns.
IV) A combination of 3 units of capital and 4 units of labor produces 171.4 units of output.

Accepted Answer

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

Question 11

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. The function for the marginal product of capital is ____.

Accepted Answer

A)  2.4K0.4L-0.4 
B)  1.6K-0.6L0.6 
C)  KL 
D)  (3/2)KL-1 
A)  2.4K0.4L-0.4 
B)  1.6K-0.6L0.6 
C)  KL 
D)  (3/2)KL-1

Question 12

(Table: Production Process I) Diminishing marginal returns to labor occur in production process _____, and diminishing marginal returns to capital occur in production process _____.

Accepted Answer

A)  1; 3 
B)  2; 1 
C)  2; 3 
D)  1; 1 
A)  1; 3 
B)  2; 1 
C)  2; 3 
D)  1; 1

Question 13

(Figure: Production Function V) Refer to the production function, which has a slope of 1/L0.5.   The average product of labor for L = 1 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 14

Suppose that a firm's production function is   
. Use calculus to find the marginal rate of technical substitution and discuss how MRTSLK changes as the firm uses more labor, holding output constant.

Accepted Answer

Use the marginal products to solve for t

Question 15

Suppose the slope of a short-run production function is given by 2/L0.5. Which of the following statements is (are) TRUE?
​
I. The marginal product of the fifth worker is 0.20.
II. The production function exhibits increasing marginal returns.
III. The marginal product of the sixteenth worker is 0.50.
IV. The production function's slope eventually changes from positive to negative as the firm produces more and more.

Accepted Answer

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

Question 16

The production function for laser eye surgery is given by Q = 20K0.5L0.5, where Q is the number of laser eye surgeries performed per day, K is the number of eye surgery machines (which is fixed at 2 in the short run), and L is the number of employees. The marginal product of labor for L = 3 is ____.

Accepted Answer

A)  28.28 
B)  11.71 
C)  9.43 
D)  8.99 
A)  28.28 
B)  11.71 
C)  9.43 
D)  8.99

Question 17

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. Suppose that the wage rate is $5 per hour, the rental rate of capital is $10 per hour, and the baker wants to produce 4,000 loaves of bread. The firm's demand for labor is ____.

Accepted Answer

A)  L = 2.95W-0.4 
B)  L = 2.95W-0.6 
C)  W = 2.95L-0.4 
D)  L = 2.95W 
A)  L = 2.95W-0.4 
B)  L = 2.95W-0.6 
C)  W = 2.95L-0.4 
D)  L = 2.95W

Question 18

(Table: Capital and Labor XIV) Consider the production function that this table shows.   Suppose the firm is using 3 units of capital and 2 units of labor and then decides to employ a third worker. The marginal product of the third worker is ____.

Accepted Answer

A)  49.33 
B)  40.24 
C)  31.78 
D)  26.79 
A)  49.33 
B)  40.24 
C)  31.78 
D)  26.79

Question 19

(Figure: Capital and Labor VI) Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $200 per day and rental rate per unit of capital is $500 per day. The firm's isocost line at the current expenditure level is represented by:

Accepted Answer

A)  C1. 
B)  C2. 
C)  C3. 
D)  C4. 
A)  C1. 
B)  C2. 
C)  C3. 
D)  C4.

Question 20

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. Use calculus to:
a. determine a function for the marginal product of labor.
b. determine a function for the marginal product of capital.
c. find the marginal rate of technical substitution.
d. discuss how MRTSLK changes as the firm uses more labor, holding output constant.

Accepted Answer

a. Marginal product of labor is the part

Suppose a firm's short-run production function is given by Q = 16L^0.8. What is the marginal product of the fourth worker?

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 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. The function for the marginal rate of technical substitution is ____.

Which of the following statements best exemplifies the firm's constrained minimization problem?

A basic assumption of production is that the firm:

Which of the following is (are) example(s) of production functions? I. Q = 56K + 18L II. Q = 2K^0.8L^0.2 III. Q = KL

Which situation will likely give rise to diminishing marginal product of labor?

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 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. The function for the marginal product of capital is ____.

(Table: Production Process I) Diminishing marginal returns to labor occur in production process _, and diminishing marginal returns to capital occur in production process _.

(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 = 1 is ____.

Suppose that a firm's production function is . Use calculus to find the marginal rate of technical substitution and discuss how MRTS_LK changes as the firm uses more labor, holding output constant.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 3 units of capital and 2 units of labor and then decides to employ a third worker. The marginal product of the third worker is ____.

(Figure: Capital and Labor VI) Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $200 per day and rental rate per unit of capital is $500 per day. The firm's isocost line at the current expenditure level is represented by:

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

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Exam 6: Producer Behavior

Suppose a firm's short-run production function is given by Q = 16L0.8. What is the marginal product of the fourth worker?

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. The function for the marginal rate of technical substitution is ____.

Which of the following statements best exemplifies the firm's constrained minimization problem?

A basic assumption of production is that the firm:

Which of the following is (are) example(s) of production functions? I. Q = 56K + 18L II. Q = 2K0.8L0.2 III. Q = KL

Which situation will likely give rise to diminishing marginal product of labor?

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. The function for the marginal product of capital is ____.

(Table: Production Process I) Diminishing marginal returns to labor occur in production process _____, and diminishing marginal returns to capital occur in production process _____.

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

Suppose that a firm's production function is . Use calculus to find the marginal rate of technical substitution and discuss how MRTSLK changes as the firm uses more labor, holding output constant.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 3 units of capital and 2 units of labor and then decides to employ a third worker. The marginal product of the third worker is ____.

(Figure: Capital and Labor VI) Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $200 per day and rental rate per unit of capital is $500 per day. The firm's isocost line at the current expenditure level is represented by:

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

Suppose a firm's short-run production function is given by Q = 16L^0.8. What is the marginal product of the fourth worker?

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 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. The function for the marginal rate of technical substitution is ____.

Which of the following is (are) example(s) of production functions? I. Q = 56K + 18L II. Q = 2K^0.8L^0.2 III. Q = KL

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 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. The function for the marginal product of capital is ____.

(Table: Production Process I) Diminishing marginal returns to labor occur in production process _, and diminishing marginal returns to capital occur in production process _.

(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 = 1 is ____.

Suppose that a firm's production function is . Use calculus to find the marginal rate of technical substitution and discuss how MRTS_LK changes as the firm uses more labor, holding output constant.