Question 1

Isocost curves represent

Accepted Answer

A) least cost combinations of inputs. 
B) combinations of inputs that can be purchased given their prices for the same total cost. 
C) a producers cost function. 
D) None of the above 
A) least cost combinations of inputs. 
B) combinations of inputs that can be purchased given their prices for the same total cost. 
C) a producers cost function. 
D) None of the above B

Question 2

An advantage of using the cross-sectional regression method in estimating production is that

Accepted Answer

A) the problem of technological change over time is overcome. 
B) there is no need to adjust data,which are in monetary terms for geographical differences. 
C) we can assume that all plants operate at their most efficient input combinations. 
D) All of the above 
A) the problem of technological change over time is overcome. 
B) there is no need to adjust data,which are in monetary terms for geographical differences. 
C) we can assume that all plants operate at their most efficient input combinations. 
D) All of the above A

Question 3

In the long run,a firm is said to be experiencing decreasing returns to scale if a 10 percent increase in inputs results in

Accepted Answer

A) an increase in output from 100 to 110. 
B) a decrease in output from 100 to 90. 
C) an increase in output from 100 to 105. 
D) a decrease in output from 100 to 85. 
A) an increase in output from 100 to 110. 
B) a decrease in output from 100 to 90. 
C) an increase in output from 100 to 105. 
D) a decrease in output from 100 to 85. C

Question 4

Q = K1/2L1/2
w = $2,r = $2
The firm would like to know the maximum output that can be produced for $8,000.Find the combination of inputs that maximizes output for a cost of $8,000,the amount of output that can be produced,and identify the expansion path.

Accepted Answer

MP_L= 1/2 K^1/2L^-1/2 MP_K= 1/2 K^-1/2L^1/2 Optimization requi

Question 5

A firm that operates in Stage III of the short-run production function

Accepted Answer

A) has too much fixed capacity relative to its variable inputs. 
B) has too little fixed capacity relative to its variable inputs. 
C) has greatly overestimated the demand for its output. 
D) should try to increase the amount of variable input used. 
A) has too much fixed capacity relative to its variable inputs. 
B) has too little fixed capacity relative to its variable inputs. 
C) has greatly overestimated the demand for its output. 
D) should try to increase the amount of variable input used.

Question 6

Assume a firm employs 10 workers and pays each $15 per hour.Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4.According to economic theory,in the short run

Accepted Answer

A) the firm should hire additional workers. 
B) the firm should reduce the number of workers employed. 
C) the firm should continue to employ 10 workers. 
D) More information is required to answer this question. 
A) the firm should hire additional workers. 
B) the firm should reduce the number of workers employed. 
C) the firm should continue to employ 10 workers. 
D) More information is required to answer this question.

Question 7

Marginal rates of technical substitution (MRTS)represent

Accepted Answer

A) the optimum combinations of inputs. 
B) cost-minimizing combinations of inputs. 
C) the degree to which one input can replace another without output changing. 
D) All of the above 
A) the optimum combinations of inputs. 
B) cost-minimizing combinations of inputs. 
C) the degree to which one input can replace another without output changing. 
D) All of the above

Question 8

________ functions are very useful in analyzing production functions,which exhibit both increasing and decreasing marginal products.

Accepted Answer

A) Cobb-Douglas 
B) Straight-line 
C) Quadratic 
D) Cubic 
A) Cobb-Douglas 
B) Straight-line 
C) Quadratic 
D) Cubic

Question 9

How would you choose to estimate a production function for a single plant? How would you choose to estimate a production function for a number of firms in an industry? Explain.

Accepted Answer

Estimating a production function for a s

Question 10

If MRP > MLC,it means that a firm should

Accepted Answer

A) use less labor. 
B) use more labor. 
C) increase its fixed capacity. 
D) decrease its fixed capacity. 
A) use less labor. 
B) use more labor. 
C) increase its fixed capacity. 
D) decrease its fixed capacity.

Question 11

Output (Total Product)is maximized when

Accepted Answer

A) average productivity is at its maximum. 
B) the "law of diminishing returns" sets in. 
C) marginal productivity is zero. 
D) marginal productivity is at its maximum. 
A) average productivity is at its maximum. 
B) the "law of diminishing returns" sets in. 
C) marginal productivity is zero. 
D) marginal productivity is at its maximum.

Question 12

The term Production Function refers to the

Accepted Answer

A) use of machinery and equipment in production. 
B) relationship between costs and output. 
C) relationship between inputs and output. 
D) role of labor unions. 
A) use of machinery and equipment in production. 
B) relationship between costs and output. 
C) relationship between inputs and output. 
D) role of labor unions.

Question 13

A major advantage of the ________ production function is that it can be easily transformed into a linear function,and thus can be analyzed with the linear regression method.

Accepted Answer

A) cubic 
B) power 
C) quadratic 
D) None of the above 
A) cubic 
B) power 
C) quadratic 
D) None of the above

Question 14

Which of the following holds true?

Accepted Answer

A) When the Marginal Product (MP)is rising,Marginal cost (M
C) is rising; and when MP is falling,MC is falling. 
B) When MP is rising,MC is falling,and when MP is falling,MC is rising. 
C) When MP is rising,MC is constant,and when MP is falling,MC is negative. 
D) There is no relationship between MP and MC. 
A) When the Marginal Product (MP)is rising,Marginal cost (M
C) is rising; and when MP is falling,MC is falling. 
B) When MP is rising,MC is falling,and when MP is falling,MC is rising. 
C) When MP is rising,MC is constant,and when MP is falling,MC is negative. 
D) There is no relationship between MP and MC.

Question 15

Which of the following indicates when Stage II ends and Stage III begins in the short-run production function?

Accepted Answer

A) when AP = 0 
B) when MP = 0 
C) when MP = AP 
D) when MP starts to diminish 
A) when AP = 0 
B) when MP = 0 
C) when MP = AP 
D) when MP starts to diminish

Question 16

What are the major issues that must be considered in measuring inputs for regression analysis of production functions?

Accepted Answer

How is labor to be measured? Can it be m

Question 17

Which of the following statements about the short-run production function is true?

Accepted Answer

A) MP always equals AP at the maximum point of MP. 
B) MP always equals zero when TP is at its maximum point. 
C) TP starts to decline at the point of diminishing returns. 
D) When MP diminishes,AP is at its minimum point. 
E) None of the above is true. 
A) MP always equals AP at the maximum point of MP. 
B) MP always equals zero when TP is at its maximum point. 
C) TP starts to decline at the point of diminishing returns. 
D) When MP diminishes,AP is at its minimum point. 
E) None of the above is true.

Question 18

When is it not in the best interest of a company to hire additional workers in the short run?

Accepted Answer

A) when the average product of labor is decreasing 
B) when the firm is in Stage II of the production process 
C) when the marginal revenue product equals zero 
D) when the wage rate is equal to or greater than labor's marginal revenue product 
A) when the average product of labor is decreasing 
B) when the firm is in Stage II of the production process 
C) when the marginal revenue product equals zero 
D) when the wage rate is equal to or greater than labor's marginal revenue product

Question 19

In economic theory,if an additional worker adds less to the total output than previous workers hired,it is because

Accepted Answer

A) there may be less that this person can do,given the fixed capacity of the firm. 
B) he/she is less skilled than the previously hired workers. 
C) everyone is getting in each other's way. 
D) the firm is experiencing diminishing returns to scale. 
A) there may be less that this person can do,given the fixed capacity of the firm. 
B) he/she is less skilled than the previously hired workers. 
C) everyone is getting in each other's way. 
D) the firm is experiencing diminishing returns to scale.

Question 20

Given the Production Function Q = 72X + 15X2 - X3,where Q = Output and X = Input
a.What is the Marginal Product (MP)when X = 8?
b.What is the Average Product (AP)when X = 6?
c.At what value of X will Q be at its maximum?
d.At what value of X will Diminishing Returns set in?

Accepted Answer

a.MP = 72 + 30X - 2X²,MP =120 when X=8; b

Isocost curves represent

An advantage of using the cross-sectional regression method in estimating production is that

In the long run,a firm is said to be experiencing decreasing returns to scale if a 10 percent increase in inputs results in

Q = K^1/2L^1/2 w = $2,r = $2 The firm would like to know the maximum output that can be produced for $8,000.Find the combination of inputs that maximizes output for a cost of $8,000,the amount of output that can be produced,and identify the expansion path.

A firm that operates in Stage III of the short-run production function

Assume a firm employs 10 workers and pays each $15 per hour.Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4.According to economic theory,in the short run

Marginal rates of technical substitution (MRTS)represent

________ functions are very useful in analyzing production functions,which exhibit both increasing and decreasing marginal products.

How would you choose to estimate a production function for a single plant? How would you choose to estimate a production function for a number of firms in an industry? Explain.

If MRP > MLC,it means that a firm should

Output (Total Product)is maximized when

The term Production Function refers to the

A major advantage of the ________ production function is that it can be easily transformed into a linear function,and thus can be analyzed with the linear regression method.

Which of the following holds true?

Which of the following indicates when Stage II ends and Stage III begins in the short-run production function?

What are the major issues that must be considered in measuring inputs for regression analysis of production functions?

Which of the following statements about the short-run production function is true?

When is it not in the best interest of a company to hire additional workers in the short run?

In economic theory,if an additional worker adds less to the total output than previous workers hired,it is because

Given the Production Function Q = 72X + 15X² - X³,where Q = Output and X = Input a.What is the Marginal Product (MP)when X = 8? b.What is the Average Product (AP)when X = 6? c.At what value of X will Q be at its maximum? d.At what value of X will Diminishing Returns set in?

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Special Pricing Practices

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

Exam 6: The Theory and Estimation of Production Appendices 6A,6B,and 6C

Isocost curves represent

An advantage of using the cross-sectional regression method in estimating production is that

In the long run,a firm is said to be experiencing decreasing returns to scale if a 10 percent increase in inputs results in

Q = K1/2L1/2 w = $2,r = $2 The firm would like to know the maximum output that can be produced for $8,000.Find the combination of inputs that maximizes output for a cost of $8,000,the amount of output that can be produced,and identify the expansion path.

A firm that operates in Stage III of the short-run production function

Assume a firm employs 10 workers and pays each $15 per hour.Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4.According to economic theory,in the short run

Marginal rates of technical substitution (MRTS)represent

________ functions are very useful in analyzing production functions,which exhibit both increasing and decreasing marginal products.

How would you choose to estimate a production function for a single plant? How would you choose to estimate a production function for a number of firms in an industry? Explain.

If MRP > MLC,it means that a firm should

Output (Total Product)is maximized when

The term Production Function refers to the

A major advantage of the ________ production function is that it can be easily transformed into a linear function,and thus can be analyzed with the linear regression method.

Which of the following holds true?

Which of the following indicates when Stage II ends and Stage III begins in the short-run production function?

What are the major issues that must be considered in measuring inputs for regression analysis of production functions?

Which of the following statements about the short-run production function is true?

When is it not in the best interest of a company to hire additional workers in the short run?

In economic theory,if an additional worker adds less to the total output than previous workers hired,it is because

Given the Production Function Q = 72X + 15X2 - X3,where Q = Output and X = Input a.What is the Marginal Product (MP)when X = 8? b.What is the Average Product (AP)when X = 6? c.At what value of X will Q be at its maximum? d.At what value of X will Diminishing Returns set in?

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Special Pricing Practices

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

Q = K^1/2L^1/2 w = $2,r = $2 The firm would like to know the maximum output that can be produced for $8,000.Find the combination of inputs that maximizes output for a cost of $8,000,the amount of output that can be produced,and identify the expansion path.

Given the Production Function Q = 72X + 15X² - X³,where Q = Output and X = Input a.What is the Marginal Product (MP)when X = 8? b.What is the Average Product (AP)when X = 6? c.At what value of X will Q be at its maximum? d.At what value of X will Diminishing Returns set in?