Question 1

Any return above the normal profit to an entrepreneur is known as

Accepted Answer

A)  opportunity cost 
B)  extra-normal profit 
C)  free lunch 
A)  opportunity cost 
B)  extra-normal profit 
C)  free lunch

Question 2

The rate at which one input can be substituted for another while keeping the output produced constant is the marginal rate of

Accepted Answer

A)  technical substitution 
B)  substitution 
C)  transformation 
A)  technical substitution 
B)  substitution 
C)  transformation

Question 3

Exhibit 8-1
(a)
   
(b)
   
(c)
  
-Refer to Exhibit 8-1. Which graph depicts constant returns to scale?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
A)  (a) 
B)  (b) 
C)  (c)

Question 4

The elasticity of substitution is a measure of

Accepted Answer

A)  the percentage change in the demand for a good that results from a given percentage change in its price 
B)  how easy it is to substitute one input for another in producing a given level of output 
C)  how much output decreases when inputs are increased by a fixed multiple λ 
A)  the percentage change in the demand for a good that results from a given percentage change in its price 
B)  how easy it is to substitute one input for another in producing a given level of output 
C)  how much output decreases when inputs are increased by a fixed multiple λ

Question 5

The amount by which output would increase if we added one more unit of capital to production, holding all other inputs fixed is called the

Accepted Answer

A)  average product of capital 
B)  marginal product of labor 
C)  marginal product of capital 
A)  average product of capital 
B)  marginal product of labor 
C)  marginal product of capital

Question 6

A period of time long enough to vary all factors of production is known as the

Accepted Answer

A)  long run 
B)  immediate run 
C)  short run 
A)  long run 
B)  immediate run 
C)  short run

Question 7

A production function is a function the describes the __________ amouint of _________ a producer can produce given a certain level of _________.

Accepted Answer

A)  minimum, output, inputs 
B)  maximum, input, outputs 
C)  maximum, output, inputs 
A)  minimum, output, inputs 
B)  maximum, input, outputs 
C)  maximum, output, inputs

Question 8

The assumption that states that, if we can produce a cetain output with a given combination of inputs, then with those inputs we can always produce strictly less is called the subtractivity assumption.

Accepted Answer

A) True 
 B)False

Question 9

(a)  
(b)  
(c) 
-Refer to Exhibit 8-1. Describe the returns to scale for each graph. Explain your answers.

Accepted Answer

In each graph, both inputs are increased

Question 10

Technology is

Accepted Answer

A)  the set of constraints on production defining how one can combine or convert inputs into outputs 
B)  a return that is just sufficient to recover an entrepreneur's opportunity cost 
C)  a concept that has no effect on production 
A)  the set of constraints on production defining how one can combine or convert inputs into outputs 
B)  a return that is just sufficient to recover an entrepreneur's opportunity cost 
C)  a concept that has no effect on production

Question 11

Describe some similarities between the theory of the producer and the theory of the consumer.

Accepted Answer

Both theories have constraints, technolo

Question 12

The short run is the time period during which at least one factor of production is fixed.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 8-1
(a)
   
(b)
   
(c)
  
-Refer to Exhibit 8-1. Which graph depicts decreasing returns to scale?

Accepted Answer

A)  (a) 
B)  (b) 
C)  (c) 
A)  (a) 
B)  (b) 
C)  (c)

Question 14

The assumption that states that you cannot run a production process in reverse is called the

Accepted Answer

A)  no free lunch assumption 
B)  nonreversibility assumption 
C)  divisibility assumption 
A)  no free lunch assumption 
B)  nonreversibility assumption 
C)  divisibility assumption

Question 15

The decrease in the rate that output grows when we increase the usage of one factor, but hold the usage of all others constant is known as

Accepted Answer

A)  decreasing returns to factor 
B)  decreasing returns to scale 
C)  elasticity of substitution 
A)  decreasing returns to factor 
B)  decreasing returns to scale 
C)  elasticity of substitution

Question 16

Decreasing returns to scale is a feature of a technology that is such that, when all inputs are increased by a fixed multiple λ, output increases by less than that multiple.

Accepted Answer

A) True 
 B)False

Question 17

A variable factor of production is a factor of production whose level

Accepted Answer

A)  of quality is not standardized 
B)  can be adjusted 
C)  cannot be adjusted in the time period under investigation 
A)  of quality is not standardized 
B)  can be adjusted 
C)  cannot be adjusted in the time period under investigation

Question 18

A factor of production whose level cannot be adjusted in the time period under investigation is a fixed factor of production.

Accepted Answer

A) True 
 B)False

Question 19

The marginal product curve represents how much output we get at different levels of labor inputs holding capital fixed at a given level.

Accepted Answer

A) True 
 B)False

Question 20

If all inputs are doubled and the resulting output increases by less than a factor of two, the technology features

Accepted Answer

A)  increasing returns to scale 
B)  decreasing returns to scale 
C)  constant returns to scale 
A)  increasing returns to scale 
B)  decreasing returns to scale 
C)  constant returns to scale

Exam 8: The Discovery of Production and Its Technology

Any return above the normal profit to an entrepreneur is known as

The rate at which one input can be substituted for another while keeping the output produced constant is the marginal rate of

Exhibit 8-1 (a) (b) (c) -Refer to Exhibit 8-1. Which graph depicts constant returns to scale?

The elasticity of substitution is a measure of

The amount by which output would increase if we added one more unit of capital to production, holding all other inputs fixed is called the

A period of time long enough to vary all factors of production is known as the

A production function is a function the describes the __________ amouint of _________ a producer can produce given a certain level of _________.

The assumption that states that, if we can produce a cetain output with a given combination of inputs, then with those inputs we can always produce strictly less is called the subtractivity assumption.

(a) (b) (c) -Refer to Exhibit 8-1. Describe the returns to scale for each graph. Explain your answers.

Technology is

Describe some similarities between the theory of the producer and the theory of the consumer.

The short run is the time period during which at least one factor of production is fixed.

Exhibit 8-1 (a) (b) (c) -Refer to Exhibit 8-1. Which graph depicts decreasing returns to scale?

The assumption that states that you cannot run a production process in reverse is called the

The decrease in the rate that output grows when we increase the usage of one factor, but hold the usage of all others constant is known as

Decreasing returns to scale is a feature of a technology that is such that, when all inputs are increased by a fixed multiple λ, output increases by less than that multiple.

A variable factor of production is a factor of production whose level

A factor of production whose level cannot be adjusted in the time period under investigation is a fixed factor of production.

The marginal product curve represents how much output we get at different levels of labor inputs holding capital fixed at a given level.

If all inputs are doubled and the resulting output increases by less than a factor of two, the technology features

Economics and Institutions: a Shift of Emphasis

Consumers and Their Preferences

Utilities Indifference Curves

Demand and Behavior in Markets

Some Applications of Consumer Demand, and Welfare Analysis

Uncertainty and the Emergence of Insurance

Uncertainty Applications and Criticisms

Cost and Choice

Cost Curves

Game Theory and the Tools of Strategic Business Analysis

Decision Making Over Time

The Internal Organization of the Firm

Perfectly Competitive Markets: Short-Run Analysis

Competitive Markets in the Long Run

Market Institutions and Auctions

The Age of Entrepreneurship: Monopoly

Natural Monopoly and the Economics of Regulation

The World of Oligopoly: Preliminaries to Successful Entry

Market Entry and the Emergence of Perfect Competition

The Problem of Exchange

General Equilibrium and the Origins of the Free Market and Interventionist Ideologies

Moral Hazard and Adverse Selection: Informational Market Failures

Externalities: the Free Market Interventionist Battle Continues

Public Goods, the Consequences of Strategic Voting Behavior, and the Role of Government

Input Markets and the Origins of Class Conflict

Filters

A production function is a function the describes the ______ amouint of _ a producer can produce given a certain level of _____.