Question 1

Economies of scope exist when:

Accepted Answer

A)  C(Q1) + C(Q2) 1,Q2). 
B)  C(Q1) − C(Q2) 1,Q2). 
C)  C(Q1) + C(Q2) > C(Q1,Q2). 
D)  C(Q1) − C(Q2) > C(Q1,Q2). 
A)  C(Q1) + C(Q2) 1,Q2). 
B)  C(Q1) − C(Q2) 1,Q2). 
C)  C(Q1) + C(Q2) > C(Q1,Q2). 
D)  C(Q1) − C(Q2) > C(Q1,Q2).

Question 2

It is profitable to hire labor so long as the:

Accepted Answer

A)  MPL is greater than wage. 
B)  MPL is less than wage. 
C)  VMPL is less than wage. 
D)  VMPL is greater than wage. 
A)  MPL is greater than wage. 
B)  MPL is less than wage. 
C)  VMPL is less than wage. 
D)  VMPL is greater than wage.

Question 3

Suppose the production function is given by Q = K1/2L1/2,and that Q = 30 and K = 25.How much labor is employed by the firm?

Accepted Answer

A)  49 
B)  6 
C)  36 
D)  25 
A)  49 
B)  6 
C)  36 
D)  25

Question 4

The Leontief production function:

Accepted Answer

A)  implies inputs are used in variable proportions. 
B)  implies inputs are used in fixed proportions. 
C)  is Q = max {bK, cL}. 
D)  is Q = aK + bL. 
A)  implies inputs are used in variable proportions. 
B)  implies inputs are used in fixed proportions. 
C)  is Q = max {bK, cL}. 
D)  is Q = aK + bL.

Question 5

If a firm's production function is Leontief and the price of capital goes down,the:

Accepted Answer

A)  firm must use less labor in order to minimize the cost of producing a given level of output. 
B)  firm must use more capital in order to minimize the cost of producing a given level of output. 
C)  firm must use less capital in order to minimize the cost of producing a given level of output. 
D)  cost-minimizing combination of capital and labor does not change. 
A)  firm must use less labor in order to minimize the cost of producing a given level of output. 
B)  firm must use more capital in order to minimize the cost of producing a given level of output. 
C)  firm must use less capital in order to minimize the cost of producing a given level of output. 
D)  cost-minimizing combination of capital and labor does not change.

Question 6

The production function for a competitive firm is Q = K.5L.5.The firm sells its output at a price of $10,and can hire labor at a wage of $5.Capital is fixed at one unit.The profit-maximizing quantity of labor is:

Accepted Answer

A)  2/5. 
B)  1. 
C)  10. 
D)  None of the answers are correct. 
A)  2/5. 
B)  1. 
C)  10. 
D)  None of the answers are correct.

Question 7

Suppose the production function is given by Q = 2K + L.If w = $4 and r = $4,how many units of K and L will be utilized in the production process?

Accepted Answer

A)  All K and no L. 
B)  All L and no K. 
C)  Equal amounts of K and L. 
D)  A combination of K and L not represented above. 
A)  All K and no L. 
B)  All L and no K. 
C)  Equal amounts of K and L. 
D)  A combination of K and L not represented above.

Question 8

If a firm is operating on the production function,then workers:

Accepted Answer

A)  must be putting forth maximal effort. 
B)  may not be putting forth maximal effort. 
C)  are usually putting forth average effort. 
D)  are usually putting forth minimal effort. 
A)  must be putting forth maximal effort. 
B)  may not be putting forth maximal effort. 
C)  are usually putting forth average effort. 
D)  are usually putting forth minimal effort.

Question 9

For the cost function C(Q)= 100 + 2Q + 3Q2,the total variable cost of producing 2 units of output is:

Accepted Answer

A)  16. 
B)  12. 
C)  4. 
D)  None of the answers are correct. 
A)  16. 
B)  12. 
C)  4. 
D)  None of the answers are correct.

Question 10

Given the following table,how many workers should be hired to maximize profits?
$\begin{array}{|l|l|l|l|}
\hline \text { Labor } & \begin{array}{l}
\text { Marginal } \
\text { Product Labor }
\end{array} & \begin{array}{l}
\text { VMP } \
\text { L }
\end{array} & \text { Wage } \
\hline 1 & 8 & \$ 32 & \$ 100 \
\hline 2 & 32 & \$ 128 & \$ 100 \
\hline 3 & 16 & \$ 64 & \$ 100 \
\hline 4 & -1 & \$-4 & \$ 100 \
\hline 5 & -12 & \$-48 & \$ 100 \
\hline
\end{array}$

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 11

If the price of labor increases,in order to minimize the costs of producing a given level of output,the firm manager should use:

Accepted Answer

A)  less of labor and more of capital. 
B)  less of labor and less of capital. 
C)  more of labor and more of capital. 
D)  more of labor and less of capital. 
A)  less of labor and more of capital. 
B)  less of labor and less of capital. 
C)  more of labor and more of capital. 
D)  more of labor and less of capital.

Question 12

Suppose the long-run average cost curve is U-shaped.When LRAC is in the increasing stage,there exist:

Accepted Answer

A)  economies of scope. 
B)  diseconomies of scope. 
C)  economies of scale. 
D)  diseconomies of scale. 
A)  economies of scope. 
B)  diseconomies of scope. 
C)  economies of scale. 
D)  diseconomies of scale.

Question 13

The first-order conditions for maximizing profits,F1F1F1S1F1F1F10 = P × F(K,L)- wL − rK,are:

Accepted Answer

A)  P × {F1F1F1S1F1F1F10F(K, L) / F1F1F1S1F1F1F10K} − r = 0 and P × {F1F1F1S1F1F1F10F(K, L) / F1F1F1S1F1F1F10L} − w = 0. 
B)  P × MPK − r = 0 and P × MPL − w = 0. 
C)  VMPK = r and VMPL = w. 
D)  All of the answers are correct. 
A)  P × {F1F1F1S1F1F1F10F(K, L) / F1F1F1S1F1F1F10K} − r = 0 and P × {F1F1F1S1F1F1F10F(K, L) / F1F1F1S1F1F1F10L} − w = 0. 
B)  P × MPK − r = 0 and P × MPL − w = 0. 
C)  VMPK = r and VMPL = w. 
D)  All of the answers are correct.

Question 14

For a cost function C = 100 + 10Q + Q2,the average variable cost of producing 20 units of output is:

Accepted Answer

A)  10. 
B)  20. 
C)  30. 
D)  None of the answers are correct. 
A)  10. 
B)  20. 
C)  30. 
D)  None of the answers are correct.

Question 15

Suppose the production function is given by Q = 3K + 4L.What is the marginal product of capital when 10 units of capital and 10 units of labor are employed?

Accepted Answer

A)  3 
B)  4 
C)  11 
D)  45 
A)  3 
B)  4 
C)  11 
D)  45

Question 16

According to the table below,what is the total cost of producing 125 units of output?
$$\begin{array} { | l | l | l |} 
\hline \mathbf { Q } & \mathbf { F C } & \mathbf { V C } \
\hline 0 & 1,000 & 0 \
\hline 20 & 1,000 & 350 \
\hline 50 & 1,000 & 700 \
\hline 90 & 1,000 & 1,050 \
\hline 125 & 1,000 & 1,400 \
\hline 145 & 1,000 & 1,750 \
\hline 160 & 1,000 & 2,100 \
\hline
\end{array}$$

Accepted Answer

A)  1,000 
B)  2,050 
C)  1,400 
D)  2,400 
A)  1,000 
B)  2,050 
C)  1,400 
D)  2,400

Question 17

Which of the following sets of economic data is minimizing the cost of producing a given level of output?

Accepted Answer

A)  MPL = 20, MPK = 40, w = $16, r = $32. 
B)  MPL = 20, MPK = 40, w = $32, r = $16. 
C)  MPL = 40, MPK = 20, w = $16, r = $32. 
D)  MPL = 40, MPK = 40, w = $16, r = $32. 
A)  MPL = 20, MPK = 40, w = $16, r = $32. 
B)  MPL = 20, MPK = 40, w = $32, r = $16. 
C)  MPL = 40, MPK = 20, w = $16, r = $32. 
D)  MPL = 40, MPK = 40, w = $16, r = $32.

Question 18

Whenever an isoquant exhibits a diminishing marginal rate of technical substitution,the corresponding isoquants are:

Accepted Answer

A)  convex to the origin. 
B)  concave to the origin. 
C)  L-shaped. 
D)  linear. 
A)  convex to the origin. 
B)  concave to the origin. 
C)  L-shaped. 
D)  linear.

Question 19

Suppose that production for good X is characterized by the following production function,Q = K0.5L0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $86.80 and the per-unit wage,w,is $20,then the average total cost of using 25 units of capital and 49 units of labor is:

Accepted Answer

A)  $5. 
B)  $75. 
C)  $90. 
D)  There is insufficient information to determine the average total costs. 
A)  $5. 
B)  $75. 
C)  $90. 
D)  There is insufficient information to determine the average total costs.

Question 20

In order to minimize the cost of producing a given level of output,a firm manager should use more inputs when:

Accepted Answer

A)  that input's price rises. 
B)  that input's price falls. 
C)  that input's price remains the same. 
D)  the prices of other inputs fall. 
A)  that input's price rises. 
B)  that input's price falls. 
C)  that input's price remains the same. 
D)  the prices of other inputs fall.

Economies of scope exist when:

It is profitable to hire labor so long as the:

Suppose the production function is given by Q = K^1/2L^1/2,and that Q = 30 and K = 25.How much labor is employed by the firm?

The Leontief production function:

If a firm's production function is Leontief and the price of capital goes down,the:

The production function for a competitive firm is Q = K^.5L^.5.The firm sells its output at a price of $10,and can hire labor at a wage of $5.Capital is fixed at one unit.The profit-maximizing quantity of labor is:

Suppose the production function is given by Q = 2K + L.If w = $4 and r = $4,how many units of K and L will be utilized in the production process?

If a firm is operating on the production function,then workers:

For the cost function C(Q)= 100 + 2Q + 3Q²,the total variable cost of producing 2 units of output is:

Given the following table,how many workers should be hired to maximize profits? Labor Marginal Product Labor VMP L Wage 1 8 \ 32 \ 100 2 32 \ 128 \ 100 3 16 \ 64 \ 100 4 -1 \- 4 \ 100 5 -12 \- 48 \ 100

If the price of labor increases,in order to minimize the costs of producing a given level of output,the firm manager should use:

Suppose the long-run average cost curve is U-shaped.When LRAC is in the increasing stage,there exist:

The first-order conditions for maximizing profits, = P × F(K,L)- wL − rK,are:

For a cost function C = 100 + 10Q + Q²,the average variable cost of producing 20 units of output is:

Suppose the production function is given by Q = 3K + 4L.What is the marginal product of capital when 10 units of capital and 10 units of labor are employed?

According to the table below,what is the total cost of producing 125 units of output? 0 1,000 0 20 1,000 350 50 1,000 700 90 1,000 1,050 125 1,000 1,400 145 1,000 1,750 160 1,000 2,100

Which of the following sets of economic data is minimizing the cost of producing a given level of output?

Whenever an isoquant exhibits a diminishing marginal rate of technical substitution,the corresponding isoquants are:

In order to minimize the cost of producing a given level of output,a firm manager should use more inputs when:

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

Exam 5: The Production Process and Costs

Economies of scope exist when:

It is profitable to hire labor so long as the:

Suppose the production function is given by Q = K1/2L1/2,and that Q = 30 and K = 25.How much labor is employed by the firm?

The Leontief production function:

If a firm's production function is Leontief and the price of capital goes down,the:

The production function for a competitive firm is Q = K.5L.5.The firm sells its output at a price of $10,and can hire labor at a wage of $5.Capital is fixed at one unit.The profit-maximizing quantity of labor is:

Suppose the production function is given by Q = 2K + L.If w = $4 and r = $4,how many units of K and L will be utilized in the production process?

If a firm is operating on the production function,then workers:

For the cost function C(Q)= 100 + 2Q + 3Q2,the total variable cost of producing 2 units of output is:

Given the following table,how many workers should be hired to maximize profits? Labor Marginal Product Labor VMP L Wage 1 8 \ 32 \ 100 2 32 \ 128 \ 100 3 16 \ 64 \ 100 4 -1 \- 4 \ 100 5 -12 \- 48 \ 100

If the price of labor increases,in order to minimize the costs of producing a given level of output,the firm manager should use:

Suppose the long-run average cost curve is U-shaped.When LRAC is in the increasing stage,there exist:

The first-order conditions for maximizing profits, = P × F(K,L)- wL − rK,are:

For a cost function C = 100 + 10Q + Q2,the average variable cost of producing 20 units of output is:

Suppose the production function is given by Q = 3K + 4L.What is the marginal product of capital when 10 units of capital and 10 units of labor are employed?

According to the table below,what is the total cost of producing 125 units of output? 0 1,000 0 20 1,000 350 50 1,000 700 90 1,000 1,050 125 1,000 1,400 145 1,000 1,750 160 1,000 2,100

Which of the following sets of economic data is minimizing the cost of producing a given level of output?

Whenever an isoquant exhibits a diminishing marginal rate of technical substitution,the corresponding isoquants are:

In order to minimize the cost of producing a given level of output,a firm manager should use more inputs when:

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 production function is given by Q = K^1/2L^1/2,and that Q = 30 and K = 25.How much labor is employed by the firm?

The production function for a competitive firm is Q = K^.5L^.5.The firm sells its output at a price of $10,and can hire labor at a wage of $5.Capital is fixed at one unit.The profit-maximizing quantity of labor is:

For the cost function C(Q)= 100 + 2Q + 3Q²,the total variable cost of producing 2 units of output is:

For a cost function C = 100 + 10Q + Q²,the average variable cost of producing 20 units of output is: