Question 1

Suppose over time that a firm's production process undergoes capital-saving technological progress. This implies:

Accepted Answer

A) the isoquants corresponding to any particular level of output will shift outward from the origin and the along any ray from the origin will increase. 
B) the isoquants corresponding to any particular level of output will shift outward from the origin and the along any ray from the origin will decrease. 
C) the isoquants corresponding to any particular level of output will shift inward toward the origin and the along any ray from the origin will increase. 
D) the isoquants corresponding to any particular level of output will shift inward toward the origin and the along any ray from the origin will decrease. 
A) the isoquants corresponding to any particular level of output will shift outward from the origin and the along any ray from the origin will increase. 
B) the isoquants corresponding to any particular level of output will shift outward from the origin and the along any ray from the origin will decrease. 
C) the isoquants corresponding to any particular level of output will shift inward toward the origin and the along any ray from the origin will increase. 
D) the isoquants corresponding to any particular level of output will shift inward toward the origin and the along any ray from the origin will decrease.

Question 2

The expression given below explains: $$\begin{array} { l } 
\text { MPL } = \frac { \text { change in quantity of output } Q } { \text { change in quantity of labor } L } \mid K \text { is held constant } \
= \frac { \Delta Q } { \Delta L } \mid K \text { is held constant }
\end{array}$$

Accepted Answer

A) Product hill 
B) Marginal product of labor 
C) Non-marginal product 
D) Total product 
A) Product hill 
B) Marginal product of labor 
C) Non-marginal product 
D) Total product

Question 3

For the production function $Q = a K + b L$, where the variables are graphed as usual, the equation for a typical isoquant is $L = \frac { Q - a K } { b }$.

Accepted Answer

A) True 
 B)False

Question 4

Returns to scale pertains to the impact on output of changing a single input while holding all other inputs constant; diminishing marginal returns pertains to the impact on output of increasing all inputs simultaneously.

Accepted Answer

A) True 
 B)False

Question 5

Technically inefficient points are points in the production set but not on the production function.

Accepted Answer

A) True 
 B)False

Question 6

Assuming a firm uses capital and labor to produce output, which of the following is not always a true statement?

Accepted Answer

A) Assuming the marginal products of labor and capital are greater than zero, doubling the inputs of capital and labor will lead to greater output. 
B) Assuming the marginal products of labor and capital are less than zero, doubling the inputs of capital and labor will lead to less output. 
C) Assuming the marginal products of labor and capital are greater than zero, doubling the inputs of capital and labor will lead to double the output. 
D) Assuming the marginal products of labor and capital are greater than zero, doubling the input of capital and keeping the input of labor constant will lead to greater output. 
A) Assuming the marginal products of labor and capital are greater than zero, doubling the inputs of capital and labor will lead to greater output. 
B) Assuming the marginal products of labor and capital are less than zero, doubling the inputs of capital and labor will lead to less output. 
C) Assuming the marginal products of labor and capital are greater than zero, doubling the inputs of capital and labor will lead to double the output. 
D) Assuming the marginal products of labor and capital are greater than zero, doubling the input of capital and keeping the input of labor constant will lead to greater output.

Question 7

$$\text { A production function of the form } Q = A L ^ { \alpha } K ^ { \beta } \text { is a(n): }$$

Accepted Answer

A) isoquant function 
B) Cobb-Douglas production function 
C) fixed-proportions function 
D) perfect complements function 
A) isoquant function 
B) Cobb-Douglas production function 
C) fixed-proportions function 
D) perfect complements function

Question 8

A fixed proportions production function:

Accepted Answer

A) is not observed in practice. 
B) has straight line isoquants. 
C) has L-shaped isoquants. 
D) has a constant marginal rate of technical substitution as the firm substitutes labor for capital. 
A) is not observed in practice. 
B) has straight line isoquants. 
C) has L-shaped isoquants. 
D) has a constant marginal rate of technical substitution as the firm substitutes labor for capital.

Question 9

The Cobb-Douglas production function does not exhibit a constant elasticity of substitution.

Accepted Answer

A) True 
 B)False

Question 10

$$\text { The Cobb-Douglas production function always takes the form } Q = \mathrm { K } ^ { 2 } \mathrm {~L} ^ { 2 } \text {. }$$

Accepted Answer

A) True 
 B)False

Question 11

The production function represents:

Accepted Answer

A) the quantity of inputs necessary to produce a given level of output. 
B) the various recipes for producing a given level of output. 
C) the minimum amounts of labor and capital needed to produce a given level of output. 
D) the set of all feasible combinations of inputs and outputs. 
A) the quantity of inputs necessary to produce a given level of output. 
B) the various recipes for producing a given level of output. 
C) the minimum amounts of labor and capital needed to produce a given level of output. 
D) the set of all feasible combinations of inputs and outputs.

Question 12

Which of the following is true?

Accepted Answer

A)  The Cobb-Douglas production function is given by the general formula $\mathrm { Q } = \mathrm { AL } \mathrm { K } ^ { \beta }$ and the constant elasticity of substitution is equal to 0 . 
B)  The Cobb-Douglas production function is given by the general formula $\mathrm { Q } = \mathrm { AL } \mathrm { K } ^ { \beta }$ and the constant elasticity of substitution is equal to 1 . 
C)  The Cobb-Douglas production function does not exhibit a constant elasticity of substitution. 
D)  The Cobb-Douglas production function always takes the form $Q = K ^ { 2 } L ^ { 2 }$. 
A)  The Cobb-Douglas production function is given by the general formula $\mathrm { Q } = \mathrm { AL } \mathrm { K } ^ { \beta }$ and the constant elasticity of substitution is equal to 0 . 
B)  The Cobb-Douglas production function is given by the general formula $\mathrm { Q } = \mathrm { AL } \mathrm { K } ^ { \beta }$ and the constant elasticity of substitution is equal to 1 . 
C)  The Cobb-Douglas production function does not exhibit a constant elasticity of substitution. 
D)  The Cobb-Douglas production function always takes the form $Q = K ^ { 2 } L ^ { 2 }$.

Question 13

When labor is the only input to the production function, why must it be true that when the marginal product of labor is greater than the average product of labor, the average product of labor is increasing and vice versa?

Accepted Answer

A) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average. 
B) When the marginal product of labor is below the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average. 
C) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a smaller marginal product than average, thus reducing the average. 
D) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a zero marginal product. 
A) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average. 
B) When the marginal product of labor is below the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average. 
C) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a smaller marginal product than average, thus reducing the average. 
D) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a zero marginal product.

Question 14

Consider comparing the relationship between marginal and average product. When average product neither increases nor decreases in labor because we are at a point at which $\mathrm { AP } _ { \mathrm { L } }$ is at a maximum, then marginal product is equal to average product.

Accepted Answer

A) True 
 B)False

Question 15

Given a production function $Q = 3 L K$ ,we can say that:

Accepted Answer

A) this production function is not Cobb-Douglas. 
B) this production function is Cobb-Douglas and exhibits decreasing returns to scale. 
C) this Cobb-Douglas production function does not exhibit a constant elasticity of substitution. 
D) this production function is Cobb-Douglas and exhibits increasing returns to scale. 
A) this production function is not Cobb-Douglas. 
B) this production function is Cobb-Douglas and exhibits decreasing returns to scale. 
C) this Cobb-Douglas production function does not exhibit a constant elasticity of substitution. 
D) this production function is Cobb-Douglas and exhibits increasing returns to scale.

Question 16

Returns to scale refers to:

Accepted Answer

A) the increase in output that accompanies an increase in one input, all other inputs held constant. 
B) a change in a production process that enables a firm to achieve more output from a given combination of inputs. 
C) the number of units of increase in output that can be obtained from an increase in one unit of input. 
D) the percentage by which output will increase when all inputs are increased by a given percentage. 
A) the increase in output that accompanies an increase in one input, all other inputs held constant. 
B) a change in a production process that enables a firm to achieve more output from a given combination of inputs. 
C) the number of units of increase in output that can be obtained from an increase in one unit of input. 
D) the percentage by which output will increase when all inputs are increased by a given percentage.

Question 17

A measure of how quickly the marginal rate of technical substitution of labor for capital changes as we move along an isoquant is the:

Accepted Answer

A) capital-labor ratio 
B) elasticity of substitution 
C) input substitution possibility frontier 
D) rate of technological progress 
A) capital-labor ratio 
B) elasticity of substitution 
C) input substitution possibility frontier 
D) rate of technological progress

Question 18

$$\text { Consider the CES production function } Q = \left[ 3 L ^ { .67 } + 3 K ^ { , 67 } \right] ^ { 1.5 } \text {. The elasticity of substitution is: }$$

Accepted Answer

A) 0.3 
B) 1.5 
C) 0.67 
D) 3.00 
A) 0.3 
B) 1.5 
C) 0.67 
D) 3.00

Question 19

The production function identifies the technically feasible combinations of inputs.

Accepted Answer

A) True 
 B)False

Question 20

For the production function $Q = 20 \sqrt { K L }$, the equation for a typical isoquant is

Accepted Answer

A)  $K = \frac { 20 L } { Q ^ { 2 } }$ 
B)  $K = \frac { Q ^ { 2 } } { 20 L }$ 
C)  $L = \frac { K } { 20 Q }$ 
D)  $K = 20 ( Q L ) ^ { 2 }$ 
A)  $K = \frac { 20 L } { Q ^ { 2 } }$ 
B)  $K = \frac { Q ^ { 2 } } { 20 L }$ 
C)  $L = \frac { K } { 20 Q }$ 
D)  $K = 20 ( Q L ) ^ { 2 }$

Suppose over time that a firm's production process undergoes capital-saving technological progress. This implies:

The expression given below explains: MPL =\midK is held constant =\midK is held constant

For the production function $Q = a K + b L$ , where the variables are graphed as usual, the equation for a typical isoquant is $L = \frac { Q - a K } { b }$ .

Returns to scale pertains to the impact on output of changing a single input while holding all other inputs constant; diminishing marginal returns pertains to the impact on output of increasing all inputs simultaneously.

Technically inefficient points are points in the production set but not on the production function.

Assuming a firm uses capital and labor to produce output, which of the following is not always a true statement?

$\text { A production function of the form } Q = A L ^ { \alpha } K ^ { \beta } \text { is a(n): }$

A fixed proportions production function:

The Cobb-Douglas production function does not exhibit a constant elasticity of substitution.

$\text { The Cobb-Douglas production function always takes the form } Q = \mathrm { K } ^ { 2 } \mathrm {~L} ^ { 2 } \text {. }$

The production function represents:

Which of the following is true?

When labor is the only input to the production function, why must it be true that when the marginal product of labor is greater than the average product of labor, the average product of labor is increasing and vice versa?

Consider comparing the relationship between marginal and average product. When average product neither increases nor decreases in labor because we are at a point at which $\mathrm { AP } _ { \mathrm { L } }$ is at a maximum, then marginal product is equal to average product.

Given a production function $Q = 3 L K$ ,we can say that:

Returns to scale refers to:

A measure of how quickly the marginal rate of technical substitution of labor for capital changes as we move along an isoquant is the:

$\text { Consider the CES production function } Q = \left[ 3 L ^ { .67 } + 3 K ^ { , 67 } \right] ^ { 1.5 } \text {. The elasticity of substitution is: }$

The production function identifies the technically feasible combinations of inputs.

For the production function $Q = 20 \sqrt { K L }$ , the equation for a typical isoquant is

Analyzing Economic Problems

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Exam 6: Inputs and Production Functions

Suppose over time that a firm's production process undergoes capital-saving technological progress. This implies:

The expression given below explains: MPL =\midK is held constant =\midK is held constant

For the production function Q=aK+bLQ = a K + b LQ=aK+bL , where the variables are graphed as usual, the equation for a typical isoquant is L=Q−aKbL = \frac { Q - a K } { b }L=bQ−aK​ .

Returns to scale pertains to the impact on output of changing a single input while holding all other inputs constant; diminishing marginal returns pertains to the impact on output of increasing all inputs simultaneously.

Technically inefficient points are points in the production set but not on the production function.

Assuming a firm uses capital and labor to produce output, which of the following is not always a true statement?

A production function of the form Q=ALαKβ is a(n): \text { A production function of the form } Q = A L ^ { \alpha } K ^ { \beta } \text { is a(n): } A production function of the form Q=ALαKβ is a(n):

A fixed proportions production function:

The Cobb-Douglas production function does not exhibit a constant elasticity of substitution.

The Cobb-Douglas production function always takes the form Q=K2 L2. \text { The Cobb-Douglas production function always takes the form } Q = \mathrm { K } ^ { 2 } \mathrm {~L} ^ { 2 } \text {. } The Cobb-Douglas production function always takes the form Q=K2 L2.

The production function represents:

Which of the following is true?

When labor is the only input to the production function, why must it be true that when the marginal product of labor is greater than the average product of labor, the average product of labor is increasing and vice versa?

Consider comparing the relationship between marginal and average product. When average product neither increases nor decreases in labor because we are at a point at which APL\mathrm { AP } _ { \mathrm { L } }APL​ is at a maximum, then marginal product is equal to average product.

Given a production function Q=3LKQ = 3 L KQ=3LK ,we can say that:

Returns to scale refers to:

A measure of how quickly the marginal rate of technical substitution of labor for capital changes as we move along an isoquant is the:

The production function identifies the technically feasible combinations of inputs.

For the production function Q=20KLQ = 20 \sqrt { K L }Q=20KL​ , the equation for a typical isoquant is

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Preferences and the Concept of Utility

Consumer Choice

The Theory of Demand

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets: Applications

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

For the production function $Q = a K + b L$ , where the variables are graphed as usual, the equation for a typical isoquant is $L = \frac { Q - a K } { b }$ .

$\text { A production function of the form } Q = A L ^ { \alpha } K ^ { \beta } \text { is a(n): }$

$\text { The Cobb-Douglas production function always takes the form } Q = \mathrm { K } ^ { 2 } \mathrm {~L} ^ { 2 } \text {. }$

Consider comparing the relationship between marginal and average product. When average product neither increases nor decreases in labor because we are at a point at which $\mathrm { AP } _ { \mathrm { L } }$ is at a maximum, then marginal product is equal to average product.

Given a production function $Q = 3 L K$ ,we can say that:

For the production function $Q = 20 \sqrt { K L }$ , the equation for a typical isoquant is