Question 1

In order for isoquants to have a diminishing marginal rate of substitution,they must be:

Accepted Answer

A)  L-shaped. 
B)  straight lines. 
C)  vertical. 
D)  None of the preceding statements is correct. 
A)  L-shaped. 
B)  straight lines. 
C)  vertical. 
D)  None of the preceding statements is correct.

Question 2

As the usage of an input increases,marginal product:

Accepted Answer

A)  initially increases then begins to decline. 
B)  initially decreases then begins to increase. 
C)  consistently decreases. 
D)  consistently increases. 
A)  initially increases then begins to decline. 
B)  initially decreases then begins to increase. 
C)  consistently decreases. 
D)  consistently increases.

Question 3

The marginal product of an input is defined as the change in:

Accepted Answer

A)  average output attributable to the last unit of an input. 
B)  total output attributable to the last unit of an input. 
C)  total input attributable to the last unit of an output. 
D)  average output attributable to the last unit of an output. 
A)  average output attributable to the last unit of an input. 
B)  total output attributable to the last unit of an input. 
C)  total input attributable to the last unit of an output. 
D)  average output attributable to the last unit of an output.

Question 4

If the production function is Q = KL and capital is fixed at 1 unit,then the marginal product of labor when L = 25 is:

Accepted Answer

A)  ¼. 
B)  1/10. 
C)  15. 
D)  None of the answers are correct. 
A)  ¼. 
B)  1/10. 
C)  15. 
D)  None of the answers are correct.

Question 5

Which of the following profit functions exhibits a Cobb-Douglas production function?

Accepted Answer

A)  F1F1F1S1F1F1F10 = P × K0.75L0.50 − 20L − 35K 
B)  F1F1F1S1F1F1F10 = P × min (2L, 5K) − 20L − 35K 
C)  F1F1F1S1F1F1F10 = P × (3K + 4L) − 20L − 35K 
D)  F1F1F1S1F1F1F10 = P × (3K0.5 + 4L0.5) 1/0.2 − 20L − 35K 
A)  F1F1F1S1F1F1F10 = P × K0.75L0.50 − 20L − 35K 
B)  F1F1F1S1F1F1F10 = P × min (2L, 5K) − 20L − 35K 
C)  F1F1F1S1F1F1F10 = P × (3K + 4L) − 20L − 35K 
D)  F1F1F1S1F1F1F10 = P × (3K0.5 + 4L0.5) 1/0.2 − 20L − 35K

Question 6

Suppose the production function is given by Q = min {K,L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

Accepted Answer

A)  0 
B)  4 
C)  9 
D)  13 
A)  0 
B)  4 
C)  9 
D)  13

Question 7

When marginal cost curve is below an average cost curve,average cost is:

Accepted Answer

A)  increasing with output. 
B)  declining with output. 
C)  not varying with output. 
D)  None of the preceding statements is correct. 
A)  increasing with output. 
B)  declining with output. 
C)  not varying with output. 
D)  None of the preceding statements is correct.

Question 8

Changes in the price of an input cause:

Accepted Answer

A)  isoquants to become steeper. 
B)  slope changes in the isocost line. 
C)  parallel shifts of the isocost lines. 
D)  changes in both the isoquants and isocosts of equal magnitude. 
A)  isoquants to become steeper. 
B)  slope changes in the isocost line. 
C)  parallel shifts of the isocost lines. 
D)  changes in both the isoquants and isocosts of equal magnitude.

Question 9

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.What is the total cost of producing 10 units?

Accepted Answer

A)  $2,060 
B)  $1,060 
C)  $560 
D)  $1,010 
A)  $2,060 
B)  $1,060 
C)  $560 
D)  $1,010

Question 10

Which curve(s)does the marginal cost curve intersect at the (their)minimum point?

Accepted Answer

A)  Average total cost curve 
B)  Average fixed cost curve 
C)  Average variable cost curve 
D)  Average total cost curve and average variable cost curve 
A)  Average total cost curve 
B)  Average fixed cost curve 
C)  Average variable cost curve 
D)  Average total cost curve and average variable cost curve

Question 11

A production function exhibits decreasing returns to scale if a twofold (threefold,etc.)increase in all inputs increases output by less than twofold (less than threefold,etc.).For example,by doubling the use of capital and labor,the firm would less than double its output.
a.What would the average and marginal cost curves look like under decreasing returns to scale?
 
b.Give an example of a production function that exhibits decreasing returns to scale.

Accepted Answer

a.Average and marginal cost curves are i

Question 12

The demand for labor by a profit-maximizing firm is determined by:

Accepted Answer

A)  MPL = MC. 
B)  VMPL = MC. 
C)  MPL = W. 
D)  VMPL = W. 
A)  MPL = MC. 
B)  VMPL = MC. 
C)  MPL = W. 
D)  VMPL = W.

Question 13

There are over 5,000 banks in the United States-more than 10 times more per person than in other industrialized countries.A recent study suggests that the long-run average cost curve for an individual bank is relatively flat.If Congress took steps to consolidate banks,thereby reducing the total number to 2,500,what would you expect to happen to costs within the banking industry?

Accepted Answer

With a flat long-run average cost curve,

Question 14

Your firm produces two products,Q1 and Q2.An economic consulting firm has estimated your cost function to be $C \left( Q _ { 1 } , Q _ { 2 } \right) = 100 + Q _ { 1 } Q _ { 2 } + Q _ { 1 } ^ { 2 } + Q _ { 3 } ^ { 2 }$ .
a.Are there economies of scope?
b.Are there cost complementarities?
c.Your market for Q1 is not very good,and an overseas firm has offered to buy the division of your company that produces Q1.What will happen to your marginal cost of producing Q2 if you sell the division?

Accepted Answer

a.For a quadratic multiproduct cost func

Question 15

Total product begins to fall when:

Accepted Answer

A)  marginal product is maximized. 
B)  average product is below zero. 
C)  average product is negative. 
D)  marginal product is zero. 
A)  marginal product is maximized. 
B)  average product is below zero. 
C)  average product is negative. 
D)  marginal product is zero.

Question 16

The recipe that defines the maximum amount of output that can be produced with K units of capital and L units of labor is the:

Accepted Answer

A)  production function. 
B)  technological constraint. 
C)  research and development schedule. 
D)  total product. 
A)  production function. 
B)  technological constraint. 
C)  research and development schedule. 
D)  total product.

Question 17

Suppose the production function is given by Q = min{K,L}.How much output is produced when 10 units of labor and 9 units of capital are employed?

Accepted Answer

A)  0 
B)  4 
C)  9 
D)  13 
A)  0 
B)  4 
C)  9 
D)  13

Question 18

For given input prices,isocosts farther from the origin are associated with:

Accepted Answer

A)  lower costs. 
B)  the same costs. 
C)  higher costs. 
D)  initially lower, then higher costs. 
A)  lower costs. 
B)  the same costs. 
C)  higher costs. 
D)  initially lower, then higher costs.

Question 19

For the cost function C(Q)= 100 + 4Q + 19Q2 + 2Q3,what is the marginal cost of producing the fourth unit of output?

Accepted Answer

A)  $42 
B)  $295 
C)  $252 
D)  $116 
A)  $42 
B)  $295 
C)  $252 
D)  $116

Question 20

The marginal product of capital for the Cobb-Douglas production function is given by:

Accepted Answer

A)  bKa Lb-1. 
B)  aKa-1 Lb. 
C)  aKa-1 Lb-1. 
D)  bKa Lb. 
A)  bKa Lb-1. 
B)  aKa-1 Lb. 
C)  aKa-1 Lb-1. 
D)  bKa Lb.

In order for isoquants to have a diminishing marginal rate of substitution,they must be:

As the usage of an input increases,marginal product:

The marginal product of an input is defined as the change in:

If the production function is Q = KL and capital is fixed at 1 unit,then the marginal product of labor when L = 25 is:

Which of the following profit functions exhibits a Cobb-Douglas production function?

Suppose the production function is given by Q = min {K,L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

When marginal cost curve is below an average cost curve,average cost is:

Changes in the price of an input cause:

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.What is the total cost of producing 10 units?

Which curve(s)does the marginal cost curve intersect at the (their)minimum point?

The demand for labor by a profit-maximizing firm is determined by:

Total product begins to fall when:

The recipe that defines the maximum amount of output that can be produced with K units of capital and L units of labor is the:

Suppose the production function is given by Q = min{K,L}.How much output is produced when 10 units of labor and 9 units of capital are employed?

For given input prices,isocosts farther from the origin are associated with:

For the cost function C(Q)= 100 + 4Q + 19Q² + 2Q³,what is the marginal cost of producing the fourth unit of output?

The marginal product of capital for the Cobb-Douglas production function is given by:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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Exam 5: The Production Process and Costs

In order for isoquants to have a diminishing marginal rate of substitution,they must be:

As the usage of an input increases,marginal product:

The marginal product of an input is defined as the change in:

If the production function is Q = KL and capital is fixed at 1 unit,then the marginal product of labor when L = 25 is:

Which of the following profit functions exhibits a Cobb-Douglas production function?

Suppose the production function is given by Q = min {K,L}.How much output is produced when 4 units of labor and 9 units of capital are employed?

When marginal cost curve is below an average cost curve,average cost is:

Changes in the price of an input cause:

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.What is the total cost of producing 10 units?

Which curve(s)does the marginal cost curve intersect at the (their)minimum point?

The demand for labor by a profit-maximizing firm is determined by:

Total product begins to fall when:

The recipe that defines the maximum amount of output that can be produced with K units of capital and L units of labor is the:

Suppose the production function is given by Q = min{K,L}.How much output is produced when 10 units of labor and 9 units of capital are employed?

For given input prices,isocosts farther from the origin are associated with:

For the cost function C(Q)= 100 + 4Q + 19Q2 + 2Q3,what is the marginal cost of producing the fourth unit of output?

The marginal product of capital for the Cobb-Douglas production function is given by:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.What is the total cost of producing 10 units?

For the cost function C(Q)= 100 + 4Q + 19Q² + 2Q³,what is the marginal cost of producing the fourth unit of output?