Question 1

Suppose the w = $20 and r = $30.The isocost line for a firm in this industry is:

Accepted Answer

A)  C = 20K + 30L. 
B)  K = 0.033C − 0.66L. 
C)  1.5L + K = 0.5C. 
D)  Depends entirely on the functional form of the production function. 
A)  C = 20K + 30L. 
B)  K = 0.033C − 0.66L. 
C)  1.5L + K = 0.5C. 
D)  Depends entirely on the functional form of the production function.

Question 2

The manager of a national retailing outlet recently hired an economist to estimate the firm's production function.Based on the economist's report,the manager now knows that the firm's production function is given by $Q = K ^ { 1 / 2 } L ^ { 1 / 2 }$ and that capital is fixed at 1 unit.
a.Calculate the average product of labor when 9 units of labor are utilized.
b.Calculate the marginal product of labor when 9 units of labor are utilized.
c.Suppose the firm can hire labor at a wage of $10 per hour and output can be sold at a price of $100 per unit.Determine the profit-maximizing levels of labor and output.
d.What is the maximum price of capital at which the firm will still make nonnegative profits?

Accepted Answer

a.Q = (1)^1/2(9)^1/2 = 3.The average product of

Question 3

Suppose the production function is given by Q = 4K + 3L.What is the average product of labor when 10 units of capital and 5 units of labor are employed?

Accepted Answer

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

Question 4

What is the value marginal product of labor if: P = $10,MPL = $25,and APL = 40?

Accepted Answer

A)  $10,000 
B)  $1,000 
C)  $400 
D)  $250 
A)  $10,000 
B)  $1,000 
C)  $400 
D)  $250

Question 5

In 1995 the U.S.Justice Department sued to block a merger between Microsoft and Intuit,the producer of the nation's best-selling business software.The Justice Department argued that the merger would lessen competition and raise prices of business software.Is there an economic argument that the merger might actually result in lower prices?

Accepted Answer

If there are economies of scope or cost

Question 6

The production function in the table below exhibits negative marginal returns to capital over what output range?
$$\begin{array}{l}
\text { Production Function far God } \mathbf { X }\
\begin{array} { l l l l l } 
L ^ { * } & K & Q & M _ { K } = ( \Delta Q / \Delta K ) & \begin{array} { l } 
\mathbf { M P } _ { K } = ( Q / K ) \
\text { Mverage }
\end{array} \
\text { Labor } & \text { Capital } & \text { Output } & \begin{array} { l } 
\text { Product of } \
\text { Capital }
\end{array} & \begin{array} { l } 
\text { Product of } \
\text { Capital }
\end{array} \
9 & 0 & 0 & - & - \
9 & 10 & 57 & 5.7 & 5.70 \
9 & 20 & 324 & 26.7 & 16.20 \
9 & 30 & 657 & 33.3 & \mathbf { B } \
9 & 40 & 1,072 & 41.5 & 26.80 \
9 & 50 & 1,524 & 45.2 & 30.48 \
9 & 60 & 1,976 & 45.2 & 32.93 \
9 & 70 & 2,391 & 41.5 & 34.16 \
9 & 80 & 2,724 & 33.3 & 34.05 \
9 & 90 & 2,991 & \mathbf { A } & 33.23 \
9 & 100 & 3,048 & 5.7 & 30.48 \
9 & 110 & 3,016 & - 3.2 & 27.42 \
9 & 120 & 2,945 & - 7.1 & 24.54
\end{array}
\end{array}$$

Accepted Answer

A)  Between 0 and 1,524 
B)  Between 0 and 2,991 
C)  Between 2,391 and 3,048 
D)  Between 3,016 and 2,945 
A)  Between 0 and 1,524 
B)  Between 0 and 2,991 
C)  Between 2,391 and 3,048 
D)  Between 3,016 and 2,945

Question 7

Inputs a manager may adjust in order to alter production are:

Accepted Answer

A)  all factors. 
B)  variable factors. 
C)  long-run factors. 
D)  fixed factors. 
A)  all factors. 
B)  variable factors. 
C)  long-run factors. 
D)  fixed factors.

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

Which of the following profit functions exhibits a linear 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 10

Variable factors of production are the inputs that a manager:

Accepted Answer

A)  may adjust in order to alter sales. 
B)  may adjust in order to alter production. 
C)  cannot adjust in the short run. 
D)  cannot adjust in the long run. 
A)  may adjust in order to alter sales. 
B)  may adjust in order to alter production. 
C)  cannot adjust in the short run. 
D)  cannot adjust in the long run.

Question 11

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 $25 and the per-unit wage,w,is $15,then the variable cost of using 81 units of capital and 9 units of labor is:

Accepted Answer

A)  $2,160. 
B)  $2,025. 
C)  $135. 
D)  There is insufficient information to determine the variable costs. 
A)  $2,160. 
B)  $2,025. 
C)  $135. 
D)  There is insufficient information to determine the variable costs.

Question 12

You have been hired to replace the manager of a firm that used only two inputs,capital and labor,to produce output.The firm can hire as much labor as it wants at a wage of $5 per hour and can rent as much capital as it wants at a price of $50 per hour.After you look at the company books,you learn that the company has been using capital and labor in amounts that imply a marginal product of labor of 50 and a marginal product of capital of 100.Do you know why the firm hired you?

Accepted Answer

a.See below: @#IMG-DLM& b.MP_K = 1; MP_L = 1.These mar

Question 13

The creation of a new product is referred to as:

Accepted Answer

A)  process innovation. 
B)  independent research and development. 
C)  product innovation. 
D)  patent disclosure. 
A)  process innovation. 
B)  independent research and development. 
C)  product innovation. 
D)  patent disclosure.

Question 14

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.At 3 units of output,the marginal cost curve is:

Accepted Answer

A)  in the increasing stage. 
B)  in the declining stage. 
C)  at the minimum level. 
D)  at the maximum level. 
A)  in the increasing stage. 
B)  in the declining stage. 
C)  at the minimum level. 
D)  at the maximum level.

Question 15

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

Accepted Answer

A)  10. 
B)  200. 
C)  210. 
D)  None of the answers are correct. 
A)  10. 
B)  200. 
C)  210. 
D)  None of the answers are correct.

Question 16

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

Accepted Answer

A)  100. 
B)  50. 
C)  3. 
D)  2. 
A)  100. 
B)  50. 
C)  3. 
D)  2.

Question 17

The production function is Q = K.6 L.4.The marginal rate of technical substitution is:

Accepted Answer

A)  2/3 K-1 L. 
B)  K-1 L-1. 
C)  2/3 K L-1. 
D)  K.4 L-.6. 
A)  2/3 K-1 L. 
B)  K-1 L-1. 
C)  2/3 K L-1. 
D)  K.4 L-.6.

Question 18

The combinations of inputs that produce a given level of output are depicted by:

Accepted Answer

A)  indifference curves. 
B)  budget lines. 
C)  isocost curves. 
D)  isoquants. 
A)  indifference curves. 
B)  budget lines. 
C)  isocost curves. 
D)  isoquants.

Question 19

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

Accepted Answer

A)  3 
B)  4 
C)  7 
D)  45 
A)  3 
B)  4 
C)  7 
D)  45

Question 20

Which of the following profit functions exhibits a Leontief 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

Suppose the w = $20 and r = $30.The isocost line for a firm in this industry is:

Suppose the production function is given by Q = 4K + 3L.What is the average product of labor when 10 units of capital and 5 units of labor are employed?

What is the value marginal product of labor if: P = $10,MP_L = $25,and AP_L = 40?

Inputs a manager may adjust in order to alter production are:

Changes in the price of an input cause:

Which of the following profit functions exhibits a linear production function?

Variable factors of production are the inputs that a manager:

The creation of a new product is referred to as:

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.At 3 units of output,the marginal cost curve is:

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

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

The production function is Q = K^.6 L^.4.The marginal rate of technical substitution is:

The combinations of inputs that produce a given level of output are depicted by:

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

Which of the following profit functions exhibits a Leontief production function?

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

Suppose the w = $20 and r = $30.The isocost line for a firm in this industry is:

Suppose the production function is given by Q = 4K + 3L.What is the average product of labor when 10 units of capital and 5 units of labor are employed?

What is the value marginal product of labor if: P = $10,MPL = $25,and APL = 40?

Inputs a manager may adjust in order to alter production are:

Changes in the price of an input cause:

Which of the following profit functions exhibits a linear production function?

Variable factors of production are the inputs that a manager:

The creation of a new product is referred to as:

Suppose the cost function is C(Q)= 50 + Q − 10Q2 + 2Q3.At 3 units of output,the marginal cost curve is:

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

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

The production function is Q = K.6 L.4.The marginal rate of technical substitution is:

The combinations of inputs that produce a given level of output are depicted by:

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

Which of the following profit functions exhibits a Leontief production function?

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

What is the value marginal product of labor if: P = $10,MP_L = $25,and AP_L = 40?

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.At 3 units of output,the marginal cost curve is:

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

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

The production function is Q = K^.6 L^.4.The marginal rate of technical substitution is: