Question 1

-The above figure shows the isoquants for the production of steel. In which regions of production are there increasing, decreasing, and constant returns to scale?

Accepted Answer

When output is less than 10,000 tons, there are increasing returns to scale. Between 10,000 and 20,000 tons, there are constant returns to scale. For output greater than 20,000 tons, there are decreasing returns to scale.

Question 2

Explain why labor might not always be a variable input.

Accepted Answer

In the real world units of labor are not identical. Many firms employ highly specialized units of labor. Their supply might be very inelastic so that the firm cannot easily increase the amount of this type of labor.

Question 3

If a firm fired one worker and lost 12 units of production and decides to add one more unit of capital, then to remain on the same isoquant what must be TRUE?

Accepted Answer

A) The MPK of the next unit of capital added equals 12. 
B) The firm must force the other workers to work more. 
C) The firm will experience a decline in output. 
D) The marginal rate of technical substitution is greater than 12. 
A) The MPK of the next unit of capital added equals 12. 
B) The firm must force the other workers to work more. 
C) The firm will experience a decline in output. 
D) The marginal rate of technical substitution is greater than 12. A

Question 4

Which of the following is NOT a factor of production?

Accepted Answer

A) labor 
B) capital 
C) money 
D) materials 
A) labor 
B) capital 
C) money 
D) materials

Question 5

Which of the following is an output of production?

Accepted Answer

A) a haircut 
B) a U.S. savings bond 
C) a share of Acme Corporation stock 
D) None of the above. 
A) a haircut 
B) a U.S. savings bond 
C) a share of Acme Corporation stock 
D) None of the above.

Question 6

Which of the following statements is TRUE in the short run?

Accepted Answer

A) Generally, labor is a variable input. 
B) Generally, capital is a variable input. 
C) Raw materials are generally considered to be fixed inputs. 
D) Whether or not an input is considered fixed is dependent on the price paid for the input. 
A) Generally, labor is a variable input. 
B) Generally, capital is a variable input. 
C) Raw materials are generally considered to be fixed inputs. 
D) Whether or not an input is considered fixed is dependent on the price paid for the input.

Question 7

Which situation is most likely to exhibit diminishing marginal returns to labor?

Accepted Answer

A) a factory that obtains a new machine for every new worker hired 
B) a factory that hires more workers and never increases the amount of machinery 
C) a factory that increases the amount of machinery and holds the number of workers constant 
D) None of these situations will result in diminishing marginal returns to labor. 
A) a factory that obtains a new machine for every new worker hired 
B) a factory that hires more workers and never increases the amount of machinery 
C) a factory that increases the amount of machinery and holds the number of workers constant 
D) None of these situations will result in diminishing marginal returns to labor.

Question 8

Given the production function q = 4L + K, what is formula for the marginal product of labor?

Accepted Answer

A) 4 
B) 4 + K 
C) 4K 
D) Cannot be determined with the information given. 
A) 4 
B) 4 + K 
C) 4K 
D) Cannot be determined with the information given.

Question 9

Capital saving nonneutral technical progress allows a firm to

Accepted Answer

A) produce more output with the same inputs. 
B) use less capital and the same amount of other inputs to produce the same level of output. 
C) use more capital to produce the same level of output. 
D) use less capital and more of other inputs to produce the same level of output. 
A) produce more output with the same inputs. 
B) use less capital and the same amount of other inputs to produce the same level of output. 
C) use more capital to produce the same level of output. 
D) use less capital and more of other inputs to produce the same level of output.

Question 10

Returns to scale is a concept that operates

Accepted Answer

A) only in the short run. 
B) only in the long run. 
C) in both the long run and the short run. 
D) in either the long run or the short run depending on the industry of the firm. 
A) only in the short run. 
B) only in the long run. 
C) in both the long run and the short run. 
D) in either the long run or the short run depending on the industry of the firm.

Question 11

Which of the following statements best describes a production function?

Accepted Answer

A) the maximum profit generated from given levels of inputs 
B) the maximum level of output generated from given levels of inputs 
C) all levels of output that can be generated from given levels of inputs 
D) all levels of inputs that could produce a given level of output 
A) the maximum profit generated from given levels of inputs 
B) the maximum level of output generated from given levels of inputs 
C) all levels of output that can be generated from given levels of inputs 
D) all levels of inputs that could produce a given level of output

Question 12

If a firm triples inputs and produces twice the output, then there are

Accepted Answer

A) constant returns to scale. 
B) diminishing marginal product. 
C) decreasing returns to scale. 
D) increasing returns to scale. 
A) constant returns to scale. 
B) diminishing marginal product. 
C) decreasing returns to scale. 
D) increasing returns to scale.

Question 13

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

Accepted Answer

A) 100-200 units 
B) 200-400 units 
C) 400-600 units 
D) There is insufficient information to answer the question. 
A) 100-200 units 
B) 200-400 units 
C) 400-600 units 
D) There is insufficient information to answer the question.

Question 14

A factor of production that cannot be easily changed in the relevant time period is called a

Accepted Answer

A) short-run factor. 
B) fixed input. 
C) variable input. 
D) production anchor. 
A) short-run factor. 
B) fixed input. 
C) variable input. 
D) production anchor.

Question 15

Diminishing marginal returns lead to diminishing returns

Accepted Answer

A) when marginal returns fall but remain positive. 
B) only in theory. 
C) when marginal returns become negative. 
D) when labor exceeds capital. 
A) when marginal returns fall but remain positive. 
B) only in theory. 
C) when marginal returns become negative. 
D) when labor exceeds capital.

Question 16

-The above figure shows the isoquants for producing steel. Constant returns to scale are

Accepted Answer

A) present when producing less than 10,000 tons. 
B) present when producing between 10,000 and 20,000 tons. 
C) present when producing more than 20,000 tons. 
D) never present. 
A) present when producing less than 10,000 tons. 
B) present when producing between 10,000 and 20,000 tons. 
C) present when producing more than 20,000 tons. 
D) never present.

Question 17

Which of the following inputs is normally considered to be fixed in the short run?

Accepted Answer

A) labor 
B) capital 
C) money 
D) All of the above. 
A) labor 
B) capital 
C) money 
D) All of the above.

Question 18

Given the production function q = 1.37LK, what is the marginal product of labor?

Accepted Answer

A) 1.37 
B) 0 
C) 1.37K 
D) Cannot be determined with the information given. 
A) 1.37 
B) 0 
C) 1.37K 
D) Cannot be determined with the information given.

Question 19

If MPL = 3, and MRTS = -4 what is MPK?

Accepted Answer

A) 12 
B) -12 
C) 3/4 
D) -3/4 
A) 12 
B) -12 
C) 3/4 
D) -3/4

Question 20

Unlike indifference curves, isoquants can intersect.

Accepted Answer

A) True 
 B)False

-The above figure shows the isoquants for the production of steel. In which regions of production are there increasing, decreasing, and constant returns to scale?

Explain why labor might not always be a variable input.

If a firm fired one worker and lost 12 units of production and decides to add one more unit of capital, then to remain on the same isoquant what must be TRUE?

Which of the following is NOT a factor of production?

Which of the following is an output of production?

Which of the following statements is TRUE in the short run?

Which situation is most likely to exhibit diminishing marginal returns to labor?

Given the production function q = 4L + K, what is formula for the marginal product of labor?

Capital saving nonneutral technical progress allows a firm to

Returns to scale is a concept that operates

Which of the following statements best describes a production function?

If a firm triples inputs and produces twice the output, then there are

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

A factor of production that cannot be easily changed in the relevant time period is called a

Diminishing marginal returns lead to diminishing returns

-The above figure shows the isoquants for producing steel. Constant returns to scale are

Which of the following inputs is normally considered to be fixed in the short run?

Given the production function q = 1.37LK, what is the marginal product of labor?

If MPL = 3, and MRTS = -4 what is MPK?

Unlike indifference curves, isoquants can intersect.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 5: Production

-The above figure shows the isoquants for the production of steel. In which regions of production are there increasing, decreasing, and constant returns to scale?

Explain why labor might not always be a variable input.

If a firm fired one worker and lost 12 units of production and decides to add one more unit of capital, then to remain on the same isoquant what must be TRUE?

Which of the following is NOT a factor of production?

Which of the following is an output of production?

Which of the following statements is TRUE in the short run?

Which situation is most likely to exhibit diminishing marginal returns to labor?

Given the production function q = 4L + K, what is formula for the marginal product of labor?

Capital saving nonneutral technical progress allows a firm to

Returns to scale is a concept that operates

Which of the following statements best describes a production function?

If a firm triples inputs and produces twice the output, then there are

-The table in the above figure shows the levels of output resulting from different levels of inputs. Returns to scale are greatest at which level of output?

A factor of production that cannot be easily changed in the relevant time period is called a

Diminishing marginal returns lead to diminishing returns

-The above figure shows the isoquants for producing steel. Constant returns to scale are

Which of the following inputs is normally considered to be fixed in the short run?

Given the production function q = 1.37LK, what is the marginal product of labor?

If MPL = 3, and MRTS = -4 what is MPK?

Unlike indifference curves, isoquants can intersect.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters