Question 1

Factors of production are

Accepted Answer

A)  inputs and outputs. 
B)  outputs only 
C)  inputs only 
D)  the minimum set of inputs that can produce a certain fixed quantity of output. 
A)  inputs and outputs. 
B)  outputs only 
C)  inputs only 
D)  the minimum set of inputs that can produce a certain fixed quantity of output.

Question 2

**Reference: Use the following table to answer questions 11 - 14.  
-*Marginal productivity is maximized with the ___________ worker.

Accepted Answer

A)  second 
B)  third 
C)  fourth 
D)  sixth 
A)  second 
B)  third 
C)  fourth 
D)  sixth

Question 3

Identify the true statement.

Accepted Answer

A)  Decreasing returns to scale and diminishing marginal returns are just two different ways of saying the same thing. 
B)  Returns to scale pertains to the impact on output of increasing all inputs simultaneously; diminishing marginal returns pertains to the impact of changing a single input while holding all other inputs constant. 
C)  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. 
D)  Returns to scale can be identified by calculating the slope of an isoquant. 
A)  Decreasing returns to scale and diminishing marginal returns are just two different ways of saying the same thing. 
B)  Returns to scale pertains to the impact on output of increasing all inputs simultaneously; diminishing marginal returns pertains to the impact of changing a single input while holding all other inputs constant. 
C)  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. 
D)  Returns to scale can be identified by calculating the slope of an isoquant.

Question 4

The labor requirements function is derived from

Accepted Answer

A)  the demand curve. 
B)  the supply curve. 
C)  the production function. 
D)  the capital requirement function. 
A)  the demand curve. 
B)  the supply curve. 
C)  the production function. 
D)  the capital requirement function.

Question 5

Given a production function Q = 3LK,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 6

Which one of these is false when compared to the relationship between marginal and average product?

Accepted Answer

A)  When average product is increasing in labor, marginal product is greater than average product. That is, if APL increases in L, then MPL > APL. 
B)  When average product is decreasing in labor, marginal product is less than average product. That is, if APL decreases in L, then MPL L. 
C)  The relationship between MPL and APL is not the same as the relationship between the marginal of anything and the average of anything. 
D)  When average product neither increases nor decreases in labor because we are at a point at which APL is at a maximum, then marginal product is equal to average product. 
A)  When average product is increasing in labor, marginal product is greater than average product. That is, if APL increases in L, then MPL > APL. 
B)  When average product is decreasing in labor, marginal product is less than average product. That is, if APL decreases in L, then MPL L. 
C)  The relationship between MPL and APL is not the same as the relationship between the marginal of anything and the average of anything. 
D)  When average product neither increases nor decreases in labor because we are at a point at which APL is at a maximum, then marginal product is equal to average product.

Question 7

Suppose the production function can be expressed as   .Which of the following combinations of capital and labor   lie on the same isoquant?

Accepted Answer

A)  (5, 6) and (4, 5) 
B)  (3, 2) and (7, 1) 
C)  (4, 3) and (2, 6) 
D)  (10, 3) and (15, 4) 
A)  (5, 6) and (4, 5) 
B)  (3, 2) and (7, 1) 
C)  (4, 3) and (2, 6) 
D)  (10, 3) and (15, 4)

Question 8

Identify the truthfulness of the following statements. I.When the marginal product of labor is falling,the average product of labor is falling.
II.When the marginal product curve lies above the average product curve,then average product is rising.

Accepted Answer

A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true. 
A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true.

Question 9

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 10

**Reference: Use the following table to answer questions 11 - 14.  
-*Average productivity is maximized with the ____________ worker.

Accepted Answer

A)  second 
B)  third 
C)  fourth 
D)  sixth 
A)  second 
B)  third 
C)  fourth 
D)  sixth

Question 11

**Reference: Use the following graph to answer questions 19 - 22.  
-*When labor equals 100

Accepted Answer

A)  average product is less than marginal product 
B)  average product is greater than marginal product. 
C)  average product is equal to marginal product. 
D)  the relationship between average product and marginal product cannot be determined from a total product graph. 
A)  average product is less than marginal product 
B)  average product is greater than marginal product. 
C)  average product is equal to marginal product. 
D)  the relationship between average product and marginal product cannot be determined from a total product graph.

Question 12

For a simple graph of a production function with Q on the y-axis and L on the x-axis,which of the following statements is true?

Accepted Answer

A)  The slope of the production function at a specific point equals the marginal product of labor whereas the average slope of the production function equals the average product of labor. 
B)  The average product of labor is equal to the slope of the ray from the origin to the apex of the production function for all values of L. 
C)  The slope of the production function at a specific point equals the marginal product of labor whereas the slope between the origin and a specific point on the production function equals the average product of labor. 
D)  The average product of labor is never equal to the slope of the ray from the origin to the apex of the production function. 
A)  The slope of the production function at a specific point equals the marginal product of labor whereas the average slope of the production function equals the average product of labor. 
B)  The average product of labor is equal to the slope of the ray from the origin to the apex of the production function for all values of L. 
C)  The slope of the production function at a specific point equals the marginal product of labor whereas the slope between the origin and a specific point on the production function equals the average product of labor. 
D)  The average product of labor is never equal to the slope of the ray from the origin to the apex of the production function.

Question 13

Which of the following is true?

Accepted Answer

A)  The Cobb-Douglas production function is given by the general formula Q = ALαKβ  and the constant elasticity of substitution is equal to 0. 
B)  The Cobb-Douglas production function is given by the general formula Q = ALαKβ  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 = K2 L2. 
A)  The Cobb-Douglas production function is given by the general formula Q = ALαKβ  and the constant elasticity of substitution is equal to 0. 
B)  The Cobb-Douglas production function is given by the general formula Q = ALαKβ  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 = K2 L2.

Question 14

The production function   exhibits

Accepted Answer

A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  decreasing returns to scale. 
D)  undefined returns to scale. 
A)  increasing returns to scale. 
B)  constant returns to scale. 
C)  decreasing returns to scale. 
D)  undefined returns to scale.

Question 15

Diminishing marginal returns occur when the total product function is

Accepted Answer

A)  decreasing. 
B)  increasing at a decreasing rate. 
C)  increasing at a constant rate. 
D)  increasing at an increasing rate. 
A)  decreasing. 
B)  increasing at a decreasing rate. 
C)  increasing at a constant rate. 
D)  increasing at an increasing rate.

Question 16

The law of diminishing marginal returns states that

Accepted Answer

A)  when the marginal product is above the average product, average product must be increasing. 
B)  when the marginal product is below the average product, average product must be decreasing. 
C)  as the use of one input increases holding the quantities of the other inputs fixed, the marginal product of the input eventually declines. 
D)  as the use of all inputs increases, the marginal product of the inputs eventually declines. 
A)  when the marginal product is above the average product, average product must be increasing. 
B)  when the marginal product is below the average product, average product must be decreasing. 
C)  as the use of one input increases holding the quantities of the other inputs fixed, the marginal product of the input eventually declines. 
D)  as the use of all inputs increases, the marginal product of the inputs eventually declines.

Question 17

**Reference: Use the following table for questions 36-38  
-Total product hill is

Accepted Answer

A)  A single line graph that shows the relationship between the quantity of output and the quantity of one of two inputs employed by the firm 
B)  A two-dimensional graph that shows the relationship between the quantity of output and the quantity of one of two inputs employed by the firm 
C)  A three-dimensional graph that shows the relationship between the quantity of output and the quantity of the two inputs employed by the firm 
D)  A four-dimensional graph that shows the relationship between the quantity of output and the quantity of the two inputs employed by the firm 
A)  A single line graph that shows the relationship between the quantity of output and the quantity of one of two inputs employed by the firm 
B)  A two-dimensional graph that shows the relationship between the quantity of output and the quantity of one of two inputs employed by the firm 
C)  A three-dimensional graph that shows the relationship between the quantity of output and the quantity of the two inputs employed by the firm 
D)  A four-dimensional graph that shows the relationship between the quantity of output and the quantity of the two inputs employed by the firm

Question 18

**Reference: Use the following table to answer questions 11 - 14.  
-*The marginal productivity of the third worker is

Accepted Answer

A)  30. 
B)  40. 
C)  50. 
D)  90. 
A)  30. 
B)  40. 
C)  50. 
D)  90.

Question 19

Assume that labor is measured along the horizontal axis and capital is measured along the vertical axis.If the   decreases as we move inward toward the origin along the ray (slope of the isoquant becomes flatter),we are observing

Accepted Answer

A)  neutral technological progress. 
B)  labor-saving technological progress. 
C)  capital-saving technological progress. 
D)  both labor-saving and capital-saving technological progress. 
A)  neutral technological progress. 
B)  labor-saving technological progress. 
C)  capital-saving technological progress. 
D)  both labor-saving and capital-saving technological progress.

Question 20

**Reference: Use the following table for questions 36-38  
-*Holding labor constant at 2 units,the average productivity of three units of capital is

Accepted Answer

A)  8. 
B)  12. 
C)  21. 
D)  24. 
A)  8. 
B)  12. 
C)  21. 
D)  24.

Factors of production are

**Reference: Use the following table to answer questions 11 - 14. -*Marginal productivity is maximized with the ___________ worker.

Identify the true statement.

The labor requirements function is derived from

Given a production function Q = 3LK,we can say that

Which one of these is false when compared to the relationship between marginal and average product?

Suppose the production function can be expressed as .Which of the following combinations of capital and labor lie on the same isoquant?

Identify the truthfulness of the following statements. I.When the marginal product of labor is falling,the average product of labor is falling. II.When the marginal product curve lies above the average product curve,then average product is rising.

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?

**Reference: Use the following table to answer questions 11 - 14. -*Average productivity is maximized with the ____________ worker.

**Reference: Use the following graph to answer questions 19 - 22. -*When labor equals 100

For a simple graph of a production function with Q on the y-axis and L on the x-axis,which of the following statements is true?

Which of the following is true?

The production function exhibits

Diminishing marginal returns occur when the total product function is

The law of diminishing marginal returns states that

**Reference: Use the following table for questions 36-38 -Total product hill is

**Reference: Use the following table to answer questions 11 - 14. -*The marginal productivity of the third worker is

Assume that labor is measured along the horizontal axis and capital is measured along the vertical axis.If the decreases as we move inward toward the origin along the ray (slope of the isoquant becomes flatter),we are observing

**Reference: Use the following table for questions 36-38 -*Holding labor constant at 2 units,the average productivity of three units of capital 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

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

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Exam 6: Inputs and Production Functions

Factors of production are

**Reference: Use the following table to answer questions 11 - 14. -*Marginal productivity is maximized with the ___________ worker.

Identify the true statement.

The labor requirements function is derived from

Given a production function Q = 3LK,we can say that

Which one of these is false when compared to the relationship between marginal and average product?

Suppose the production function can be expressed as .Which of the following combinations of capital and labor lie on the same isoquant?

Identify the truthfulness of the following statements. I.When the marginal product of labor is falling,the average product of labor is falling. II.When the marginal product curve lies above the average product curve,then average product is rising.

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?

**Reference: Use the following table to answer questions 11 - 14. -*Average productivity is maximized with the ____________ worker.

**Reference: Use the following graph to answer questions 19 - 22. -*When labor equals 100

For a simple graph of a production function with Q on the y-axis and L on the x-axis,which of the following statements is true?

Which of the following is true?

The production function exhibits

Diminishing marginal returns occur when the total product function is

The law of diminishing marginal returns states that

**Reference: Use the following table for questions 36-38 -Total product hill is

**Reference: Use the following table to answer questions 11 - 14. -*The marginal productivity of the third worker is

Assume that labor is measured along the horizontal axis and capital is measured along the vertical axis.If the decreases as we move inward toward the origin along the ray (slope of the isoquant becomes flatter),we are observing

**Reference: Use the following table for questions 36-38 -*Holding labor constant at 2 units,the average productivity of three units of capital 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

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