Question 1

The marginal product of a factor of production

Accepted Answer

A) is equal to the ratio of the amount that factor of production to the amount of output produced. 
B) is equal to the amount of additional output that can be produced with one additional unit of each factor input. 
C) is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs. 
D) is equal to the additional output that can be produced with an additional change in total factor productivity. 
E) always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs. 
A) is equal to the ratio of the amount that factor of production to the amount of output produced. 
B) is equal to the amount of additional output that can be produced with one additional unit of each factor input. 
C) is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs. 
D) is equal to the additional output that can be produced with an additional change in total factor productivity. 
E) always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs.

Question 2

That indifference curves are downward sloping

Accepted Answer

A) follows from the property that consumption and leisure are normal goods. 
B) follows from the fact that there is a direct relationship between consumption and leisure bundles. 
C) follows from the property that the consumer likes diversity in his or her consumption bundle. 
D) follows from the fact that more is preferred to less. 
E) is not true. 
A) follows from the property that consumption and leisure are normal goods. 
B) follows from the fact that there is a direct relationship between consumption and leisure bundles. 
C) follows from the property that the consumer likes diversity in his or her consumption bundle. 
D) follows from the fact that more is preferred to less. 
E) is not true.

Question 3

The following question(s)deal with The Widget Company, which produces widgets. Widgets are produced according to: $$\begin{array} { | c | c | } 
\hline \text { Number of Widget Workers } & \text { Number of Widgets Produced } \
\hline 0 & 0 \
\hline 1 & 12 \
\hline 2 & 22 \
\hline 3 & 30 \
\hline 4 & 36 \
\hline 5 & 40 \
\hline
\end{array}$$
-The marginal product of the second widget worker hired is

Accepted Answer

A) 12. 
B) 8. 
C) 2. 
D) 22. 
E) 10. 
A) 12. 
B) 8. 
C) 2. 
D) 22. 
E) 10.

Question 4

The following question(s)deal with The Gizmo Company, which has the following production function: $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Number of Gizmos Produced } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 19 \
\hline 3 & 26 \
\hline 4 & 31 \
\hline 5 & 34 \
\hline
\end{array}$$
-If the real wage is equal to 8 widgets, and only an integer number of workers can be hired, The Gizmo Company should hire

Accepted Answer

A) 2 workers. 
B) 3 workers. 
C) 4 workers. 
D) 5 workers. 
E) 6 workers. 
A) 2 workers. 
B) 3 workers. 
C) 4 workers. 
D) 5 workers. 
E) 6 workers.

Question 5

The marginal rate of substitution is defined as

Accepted Answer

A) the feasible rate of substitution given prices. 
B) the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction. 
C) the slope of the utility function. 
D) the convexity of the indifference curve. 
E) the amount of good Y substituted for good X by a consumer. 
A) the feasible rate of substitution given prices. 
B) the amount of good Y that a consumer is willing to substitute for good X and stay at a given level of satisfaction. 
C) the slope of the utility function. 
D) the convexity of the indifference curve. 
E) the amount of good Y substituted for good X by a consumer.

Question 6

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

Accepted Answer

A) the real wage and the budget line is tangent to an indifference curve. 
B) minus the real wage and the budget line intersects the indifference curve. 
C) the real wage and the budget line intersects the indifference curve. 
D) minus the real wage and the budget line is tangent to the indifference curve. 
E) the real wage and on the highest possible indifference curve. 
A) the real wage and the budget line is tangent to an indifference curve. 
B) minus the real wage and the budget line intersects the indifference curve. 
C) the real wage and the budget line intersects the indifference curve. 
D) minus the real wage and the budget line is tangent to the indifference curve. 
E) the real wage and on the highest possible indifference curve.

Question 7

We typically assume that

Accepted Answer

A) both consumption and leisure are normal goods. 
B) both consumption and leisure and complimentary goods. 
C) both consumption and leisure are inferior goods. 
D) consumption is an inferior good and leisure is a normal good. 
E) consumption is a normal good and leisure is an inferior good. 
A) both consumption and leisure are normal goods. 
B) both consumption and leisure and complimentary goods. 
C) both consumption and leisure are inferior goods. 
D) consumption is an inferior good and leisure is a normal good. 
E) consumption is a normal good and leisure is an inferior good.

Question 8

The construct of a representative firm is most helpful in describing the behaviour of all of the firms in the economy when

Accepted Answer

A) the marginal product of labour is decreasing in the amount of labour input. 
B) there are constant returns to scale. 
C) there are decreasing returns to scale. 
D) the marginal product of labour is increasing in the amount of labour input. 
E) there are increasing returns to scale. 
A) the marginal product of labour is decreasing in the amount of labour input. 
B) there are constant returns to scale. 
C) there are decreasing returns to scale. 
D) the marginal product of labour is increasing in the amount of labour input. 
E) there are increasing returns to scale.

Question 9

An indifference curve is best defined as

Accepted Answer

A) the level of consumption where a consumer is indifferent to receiving more consumption. 
B) a boundary line defining production possibilities. 
C) the set of all bundles that the consumer enjoys equally well. 
D) a boundary line between attainable and unattainable choices. 
E) a concave curve that ranks preferred consumption bundles. 
A) the level of consumption where a consumer is indifferent to receiving more consumption. 
B) a boundary line defining production possibilities. 
C) the set of all bundles that the consumer enjoys equally well. 
D) a boundary line between attainable and unattainable choices. 
E) a concave curve that ranks preferred consumption bundles.

Question 10

A utility function

Accepted Answer

A) captures the maximum satisfaction of consumers. 
B) is a stand-in for a more complicated function. 
C) captures the representative firm's ability to produce goods and services. 
D) is useful only in microeconomics, not macroeconomics. 
E) captures the preferences of the representative household over consumption and leisure goods. 
A) captures the maximum satisfaction of consumers. 
B) is a stand-in for a more complicated function. 
C) captures the representative firm's ability to produce goods and services. 
D) is useful only in microeconomics, not macroeconomics. 
E) captures the preferences of the representative household over consumption and leisure goods.

Question 11

Of the following, which is the least likely example of an increase in total factor productivity?

Accepted Answer

A) good weather 
B) the introduction of the assembly line 
C) a reduction in the relative price of energy 
D) an educated work force 
E) the invention of the personal computer 
A) good weather 
B) the introduction of the assembly line 
C) a reduction in the relative price of energy 
D) an educated work force 
E) the invention of the personal computer

Question 12

In a typical aggregate production function, total factor productivity denotes the quantity of aggregate output
that we cannot explain solely by the contributions of the labour and capital inputs. a)In reality, what explains
total factor productivity and its movements over time? b)Discuss the problems we might face in trying to
measure the factors contributing to changes in productivity over time.

Accepted Answer

There are many factors that contribute t

Question 13

"More is always preferred to less" refers to

Accepted Answer

A) choices between consumption and leisure. 
B) choices between consumption and work. 
C) choices between work and leisure. 
D) choices between happiness and utility. 
E) more consumption and less leisure. 
A) choices between consumption and leisure. 
B) choices between consumption and work. 
C) choices between work and leisure. 
D) choices between happiness and utility. 
E) more consumption and less leisure.

Question 14

In the production function, $Y = z F ( K , N d )$, total factor productivity is

Accepted Answer

A)  $Y / N d$. 
B)  $Y / K$. 
C)  $F / Y$. 
D)  $\mathrm { z }$. 
E)  $Y / Z$. 
A)  $Y / N d$. 
B)  $Y / K$. 
C)  $F / Y$. 
D)  $\mathrm { z }$. 
E)  $Y / Z$.

Question 15

The shape of the indifference curve depends on

Accepted Answer

A) the relative price of good Y. 
B) the level of happiness for the household. 
C) the substitutability between goods for the household. 
D) the family income. 
E) the price of goods. 
A) the relative price of good Y. 
B) the level of happiness for the household. 
C) the substitutability between goods for the household. 
D) the family income. 
E) the price of goods.

Question 16

A defense for the assumption that consumers maximize is that

Accepted Answer

A) it allows for many possible outcomes. 
B) mistaken consumers may receive counseling from the government. 
C) mistakes by the consumer are not likely to last for a long time. 
D) mistakes by consumers only last for two periods. 
E) consumers never make mistakes. 
A) it allows for many possible outcomes. 
B) mistaken consumers may receive counseling from the government. 
C) mistakes by the consumer are not likely to last for a long time. 
D) mistakes by consumers only last for two periods. 
E) consumers never make mistakes.

Question 17

That indifference curves are bowed in toward the origin

Accepted Answer

A) follows from the property that the consumer likes diversity in his or her consumption bundle. 
B) follows from the fact that there is a direct relationship between consumption and leisure bundles. 
C) follows from the property that consumption and leisure are normal goods. 
D) is not true. 
E) follows from the fact that more is preferred to less. 
A) follows from the property that the consumer likes diversity in his or her consumption bundle. 
B) follows from the fact that there is a direct relationship between consumption and leisure bundles. 
C) follows from the property that consumption and leisure are normal goods. 
D) is not true. 
E) follows from the fact that more is preferred to less.

Question 18

For macroeconomic purposes, it is assumed that all consumers in the economy

Accepted Answer

A) exhibit different preferences. 
B) are diverse. 
C) are identical. 
D) exhibit differences. 
E) are not identical. 
A) exhibit different preferences. 
B) are diverse. 
C) are identical. 
D) exhibit differences. 
E) are not identical.

Question 19

An economy without monetary exchange is called

Accepted Answer

A) a barter economy. 
B) an autarky economy. 
C) a socialist economy. 
D) a perfectly competitive economy. 
E) a primitive economy. 
A) a barter economy. 
B) an autarky economy. 
C) a socialist economy. 
D) a perfectly competitive economy. 
E) a primitive economy.

Question 20

When consumers act as price-takers, we say that they behave

Accepted Answer

A) irrationally. 
B) competitively. 
C) rationally. 
D) monopolistically. 
E) cooperatively. 
A) irrationally. 
B) competitively. 
C) rationally. 
D) monopolistically. 
E) cooperatively.

The marginal product of a factor of production

That indifference curves are downward sloping

The following question(s)deal with The Widget Company, which produces widgets. Widgets are produced according to: Number of Widget Workers Number of Widgets Produced 0 0 1 12 2 22 3 30 4 36 5 40 -The marginal product of the second widget worker hired is

The following question(s)deal with The Gizmo Company, which has the following production function: Number of Workers Number of Gizmos Produced 0 0 1 10 2 19 3 26 4 31 5 34 -If the real wage is equal to 8 widgets, and only an integer number of workers can be hired, The Gizmo Company should hire

The marginal rate of substitution is defined as

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

We typically assume that

The construct of a representative firm is most helpful in describing the behaviour of all of the firms in the economy when

An indifference curve is best defined as

A utility function

Of the following, which is the least likely example of an increase in total factor productivity?

"More is always preferred to less" refers to

In the production function, $Y = z F ( K , N d )$ , total factor productivity is

The shape of the indifference curve depends on

A defense for the assumption that consumers maximize is that

That indifference curves are bowed in toward the origin

For macroeconomic purposes, it is assumed that all consumers in the economy

An economy without monetary exchange is called

When consumers act as price-takers, we say that they behave

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 4: Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

The marginal product of a factor of production

That indifference curves are downward sloping

The following question(s)deal with The Widget Company, which produces widgets. Widgets are produced according to: Number of Widget Workers Number of Widgets Produced 0 0 1 12 2 22 3 30 4 36 5 40 -The marginal product of the second widget worker hired is

The following question(s)deal with The Gizmo Company, which has the following production function: Number of Workers Number of Gizmos Produced 0 0 1 10 2 19 3 26 4 31 5 34 -If the real wage is equal to 8 widgets, and only an integer number of workers can be hired, The Gizmo Company should hire

The marginal rate of substitution is defined as

At the optimal consumption bundle, the marginal rate of substitution of leisure for consumption is equal to

We typically assume that

The construct of a representative firm is most helpful in describing the behaviour of all of the firms in the economy when

An indifference curve is best defined as

A utility function

Of the following, which is the least likely example of an increase in total factor productivity?

"More is always preferred to less" refers to

In the production function, Y=zF(K,Nd)Y = z F ( K , N d )Y=zF(K,Nd) , total factor productivity is

The shape of the indifference curve depends on

A defense for the assumption that consumers maximize is that

That indifference curves are bowed in toward the origin

For macroeconomic purposes, it is assumed that all consumers in the economy

An economy without monetary exchange is called

When consumers act as price-takers, we say that they behave

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

In the production function, $Y = z F ( K , N d )$ , total factor productivity is