Question 1

If output is produced according to Q = 3K + 4L,then this production process exhibits:

Accepted Answer

A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  first increasing and then decreasing returns to scale. 
D)  constant returns to scale. 
E)  first decreasing and then increasing returns to scale. 
A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  first increasing and then decreasing returns to scale. 
D)  constant returns to scale. 
E)  first decreasing and then increasing returns to scale. D

Question 2

An isoquant represents combinations of inputs that:

Accepted Answer

A)  produce the same level of output. 
B)  produce increasing amounts of output. 
C)  minimize costs. 
D)  maximize output. 
E)  create wealth. 
A)  produce the same level of output. 
B)  produce increasing amounts of output. 
C)  minimize costs. 
D)  maximize output. 
E)  create wealth. A

Question 3

Lines that represent bundles of inputs that cost the same total amount are called:

Accepted Answer

A)  total cost curves. 
B)  isocost curves. 
C)  cost curves. 
D)  isoquants. 
E)  isoprofit curves. 
A)  total cost curves. 
B)  isocost curves. 
C)  cost curves. 
D)  isoquants. 
E)  isoprofit curves. B

Question 4

Whenever marginal product is positive and declining with increasing use of an input:

Accepted Answer

A)  total product is declining as input use increases. 
B)  average product is declining as input use increases. 
C)  marginal product is greater than average product. 
D)  marginal product is less than average product. 
E)  total product is increasing at a decreasing rate as input use increases. 
A)  total product is declining as input use increases. 
B)  average product is declining as input use increases. 
C)  marginal product is greater than average product. 
D)  marginal product is less than average product. 
E)  total product is increasing at a decreasing rate as input use increases.

Question 5

In the following table,the average product of labor at L = 3 is:

Accepted Answer

A)  5. 
B)  8. 
C)  0.2. 
D)  2. 
E)  3. 
A)  5. 
B)  8. 
C)  0.2. 
D)  2. 
E)  3.

Question 6

Cast-Steel Chairs produces office chairs using steel and labor with Q = 1/2L0.4 S0.6.If labor costs $10 per hour and steel costs $60 per unit,what is the optimal combination of labor and steel if Cast-Steel's budget is $10,000?

Accepted Answer

A)  S = 75 units, L = 550 hours. 
B)  S = 0 units, L = 1,000 hours. 
C)  S = 25 units, L = 850 hours. 
D)  S = 50 units, L = 700 hours. 
E)  S = 100 units, L = 400 hours. 
A)  S = 75 units, L = 550 hours. 
B)  S = 0 units, L = 1,000 hours. 
C)  S = 25 units, L = 850 hours. 
D)  S = 50 units, L = 700 hours. 
E)  S = 100 units, L = 400 hours.

Question 7

Happiness can be produced with wine and roses according to Q = W1/2R1/4,where W is bottles of wine and R is bouquets of roses obtained per month.If wine costs $20 per bottle and roses cost $60 per dozen,the happiness-maximizing combination of wine and roses costing $360 in total is:

Accepted Answer

A)  W = 18 bottles, R = 0 bouquets. 
B)  W = 15 bottles, R = 1 bouquets. 
C)  W = 12 bottles, R = 2 bouquets. 
D)  W = 9 bottles, R = 3 bouquets. 
E)  W = 6 bottles, R = 4 bouquets. 
A)  W = 18 bottles, R = 0 bouquets. 
B)  W = 15 bottles, R = 1 bouquets. 
C)  W = 12 bottles, R = 2 bouquets. 
D)  W = 9 bottles, R = 3 bouquets. 
E)  W = 6 bottles, R = 4 bouquets.

Question 8

When total product is at its maximum:

Accepted Answer

A)  average product is greater than marginal product. 
B)  average product is maximized. 
C)  average product equals marginal product. 
D)  marginal product equals 1. 
E)  average product equals 1. 
A)  average product is greater than marginal product. 
B)  average product is maximized. 
C)  average product equals marginal product. 
D)  marginal product equals 1. 
E)  average product equals 1.

Question 9

The marginal rate of technical substitution is defined by:

Accepted Answer

A)  MRTS1,2 = MP1 /MP2. 
B)  MRTS1,2 = MP1MP2. 
C)  MRTS1,2 = MP1/P1. 
D)  MRTS1,2 = P1/P2. 
E)  MRTS1,2 = MP2/P2. 
A)  MRTS1,2 = MP1 /MP2. 
B)  MRTS1,2 = MP1MP2. 
C)  MRTS1,2 = MP1/P1. 
D)  MRTS1,2 = P1/P2. 
E)  MRTS1,2 = MP2/P2.

Question 10

Whenever average product is declining with increases in input usage:

Accepted Answer

A)  marginal product is less than average product. 
B)  total product is declining with increases in input. 
C)  total product is increasing with increases in input. 
D)  marginal product is greater than average product. 
E)  total product is at a maximum. 
A)  marginal product is less than average product. 
B)  total product is declining with increases in input. 
C)  total product is increasing with increases in input. 
D)  marginal product is greater than average product. 
E)  total product is at a maximum.

Question 11

Whenever marginal product is increasing with increasing use of an input:

Accepted Answer

A)  total product is increasing at a decreasing rate. 
B)  total product is increasing at an increasing rate. 
C)  marginal product is less than average product. 
D)  average product is decreasing. 
E)  total product is declining as input use increases. 
A)  total product is increasing at a decreasing rate. 
B)  total product is increasing at an increasing rate. 
C)  marginal product is less than average product. 
D)  average product is decreasing. 
E)  total product is declining as input use increases.

Question 12

Output is produced according to Q = 4LK,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $10 and the price of L is $5,then the cost-minimizing combination of K and L capable of producing 32 units of output is:

Accepted Answer

A)  L = 8 and K = 1. 
B)  L = 4 and K = 2. 
C)  L = 2 and K = 2. 
D)  L = 2 and K = 4. 
E)  L = 1 and K = 8. 
A)  L = 8 and K = 1. 
B)  L = 4 and K = 2. 
C)  L = 2 and K = 2. 
D)  L = 2 and K = 4. 
E)  L = 1 and K = 8.

Question 13

The average product of labor can be illustrated geometrically as the:

Accepted Answer

A)  slope of the total product curve with respect to labor. 
B)  slope of the total product curve with respect to capital. 
C)  slope of a chord from the origin out to the total product curve at the specified level of labor. 
D)  inverse of the slope of a chord from the origin out to the total product curve at the specified level of labor. 
E)  slope of the total product curve with respect to labor divided by the slope of the total product curve with respect to capital. 
A)  slope of the total product curve with respect to labor. 
B)  slope of the total product curve with respect to capital. 
C)  slope of a chord from the origin out to the total product curve at the specified level of labor. 
D)  inverse of the slope of a chord from the origin out to the total product curve at the specified level of labor. 
E)  slope of the total product curve with respect to labor divided by the slope of the total product curve with respect to capital.

Question 14

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 60 employees and served 120 customers.This year,it had 70 employees and served 140 customers.The average product of labor is at a maximum when the number of customers is:

Accepted Answer

A)  less than 120. 
B)  equal to 120. 
C)  between 120 and 140. 
D)  equal to 140. 
E)  greater than 140. 
A)  less than 120. 
B)  equal to 120. 
C)  between 120 and 140. 
D)  equal to 140. 
E)  greater than 140.

Question 15

In the following table,the marginal product of labor at L = 10 is:

Accepted Answer

A)  0.25. 
B)  3.33. 
C)  7. 
D)  4. 
E)  3. 
A)  0.25. 
B)  3.33. 
C)  7. 
D)  4. 
E)  3.

Question 16

In the following table,the average product of labor at L = 6 is:

Accepted Answer

A)  8. 
B)  4. 
C)  6. 
D)  12. 
E)  3. 
A)  8. 
B)  4. 
C)  6. 
D)  12. 
E)  3.

Question 17

If output is produced according to Q = (KL)3/4,then this production process exhibits:

Accepted Answer

A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  first increasing and then decreasing returns to scale. 
D)  constant returns to scale. 
E)  first decreasing and then increasing returns to scale. 
A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  first increasing and then decreasing returns to scale. 
D)  constant returns to scale. 
E)  first decreasing and then increasing returns to scale.

Question 18

Lines that separate the economically relevant portion of an isoquant map from the irrelevant portion are:

Accepted Answer

A)  isocost lines. 
B)  ridge lines. 
C)  opportunity lines. 
D)  relevance lines. 
E)  budget lines. 
A)  isocost lines. 
B)  ridge lines. 
C)  opportunity lines. 
D)  relevance lines. 
E)  budget lines.

Question 19

George's shoe store buys and sells shoes in pairs.If George's isoquants are drawn with quantity of right shoes on the vertical axis and quantity of left shoes on the horizontal axis,what do they look like? They are:

Accepted Answer

A)  curves that get flatter as the number of left shoes increases. 
B)  curves that get steeper as the number of left shoes increases. 
C)  straight lines that have a negative slope. 
D)  L-shaped. 
E)  horizontal straight lines. 
A)  curves that get flatter as the number of left shoes increases. 
B)  curves that get steeper as the number of left shoes increases. 
C)  straight lines that have a negative slope. 
D)  L-shaped. 
E)  horizontal straight lines.

Question 20

The marginal product of labor is defined by the:

Accepted Answer

A)  change in output divided by the change in labor input usage. 
B)  change in labor input usage divided by the change in output. 
C)  output divided by the labor input usage. 
D)  labor input usage divided by the output level. 
E)  output divided by the marginal product of labor. 
A)  change in output divided by the change in labor input usage. 
B)  change in labor input usage divided by the change in output. 
C)  output divided by the labor input usage. 
D)  labor input usage divided by the output level. 
E)  output divided by the marginal product of labor.

If output is produced according to Q = 3K + 4L,then this production process exhibits:

An isoquant represents combinations of inputs that:

Lines that represent bundles of inputs that cost the same total amount are called:

Whenever marginal product is positive and declining with increasing use of an input:

In the following table,the average product of labor at L = 3 is:

Cast-Steel Chairs produces office chairs using steel and labor with Q = 1/2L^0.4 S^0.6.If labor costs $10 per hour and steel costs $60 per unit,what is the optimal combination of labor and steel if Cast-Steel's budget is $10,000?

Happiness can be produced with wine and roses according to Q = W^1/2R^1/4,where W is bottles of wine and R is bouquets of roses obtained per month.If wine costs $20 per bottle and roses cost $60 per dozen,the happiness-maximizing combination of wine and roses costing $360 in total is:

When total product is at its maximum:

The marginal rate of technical substitution is defined by:

Whenever average product is declining with increases in input usage:

Whenever marginal product is increasing with increasing use of an input:

Output is produced according to Q = 4LK,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $10 and the price of L is $5,then the cost-minimizing combination of K and L capable of producing 32 units of output is:

The average product of labor can be illustrated geometrically as the:

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 60 employees and served 120 customers.This year,it had 70 employees and served 140 customers.The average product of labor is at a maximum when the number of customers is:

In the following table,the marginal product of labor at L = 10 is:

In the following table,the average product of labor at L = 6 is:

If output is produced according to Q = (KL)^3/4,then this production process exhibits:

Lines that separate the economically relevant portion of an isoquant map from the irrelevant portion are:

George's shoe store buys and sells shoes in pairs.If George's isoquants are drawn with quantity of right shoes on the vertical axis and quantity of left shoes on the horizontal axis,what do they look like? They are:

The marginal product of labor is defined by the:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Exam 5: Production Theory

If output is produced according to Q = 3K + 4L,then this production process exhibits:

An isoquant represents combinations of inputs that:

Lines that represent bundles of inputs that cost the same total amount are called:

Whenever marginal product is positive and declining with increasing use of an input:

In the following table,the average product of labor at L = 3 is:

Cast-Steel Chairs produces office chairs using steel and labor with Q = 1/2L0.4 S0.6.If labor costs $10 per hour and steel costs $60 per unit,what is the optimal combination of labor and steel if Cast-Steel's budget is $10,000?

Happiness can be produced with wine and roses according to Q = W1/2R1/4,where W is bottles of wine and R is bouquets of roses obtained per month.If wine costs $20 per bottle and roses cost $60 per dozen,the happiness-maximizing combination of wine and roses costing $360 in total is:

When total product is at its maximum:

The marginal rate of technical substitution is defined by:

Whenever average product is declining with increases in input usage:

Whenever marginal product is increasing with increasing use of an input:

Output is produced according to Q = 4LK,where L is the quantity of labor input and K is the quantity of capital input.If the price of K is $10 and the price of L is $5,then the cost-minimizing combination of K and L capable of producing 32 units of output is:

The average product of labor can be illustrated geometrically as the:

Hedge Fun is a landscaping firm that specializes in topiary.Last year,the firm had 60 employees and served 120 customers.This year,it had 70 employees and served 140 customers.The average product of labor is at a maximum when the number of customers is:

In the following table,the marginal product of labor at L = 10 is:

In the following table,the average product of labor at L = 6 is:

If output is produced according to Q = (KL)3/4,then this production process exhibits:

Lines that separate the economically relevant portion of an isoquant map from the irrelevant portion are:

George's shoe store buys and sells shoes in pairs.If George's isoquants are drawn with quantity of right shoes on the vertical axis and quantity of left shoes on the horizontal axis,what do they look like? They are:

The marginal product of labor is defined by the:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Cast-Steel Chairs produces office chairs using steel and labor with Q = 1/2L^0.4 S^0.6.If labor costs $10 per hour and steel costs $60 per unit,what is the optimal combination of labor and steel if Cast-Steel's budget is $10,000?

Happiness can be produced with wine and roses according to Q = W^1/2R^1/4,where W is bottles of wine and R is bouquets of roses obtained per month.If wine costs $20 per bottle and roses cost $60 per dozen,the happiness-maximizing combination of wine and roses costing $360 in total is:

If output is produced according to Q = (KL)^3/4,then this production process exhibits: