Question 1

Increasing returns to scale result when

Accepted Answer

A) in the long-run,an increase in inputs will lead to an increase in the average products of inputs. 
B) in the long run,an increase in inputs will lead to an equivalent increase in output. 
C) labor becomes more skilled. 
D) All of the above 
A) in the long-run,an increase in inputs will lead to an increase in the average products of inputs. 
B) in the long run,an increase in inputs will lead to an equivalent increase in output. 
C) labor becomes more skilled. 
D) All of the above

Question 2

If the price of capital is $24,the price of labor is $15,and the marginal product of capital is 16,the least costly combination of capital and labor requires that the marginal product of labor be ________.

Accepted Answer

MPcapital/ MPlabor =

Question 3

When the exponents of a Cobb-Douglas production function sum to more than 1,the function exhibits

Accepted Answer

A) constant returns. 
B) increasing returns. 
C) decreasing returns. 
D) either increasing or decreasing returns. 
A) constant returns. 
B) increasing returns. 
C) decreasing returns. 
D) either increasing or decreasing returns.

Question 4

The "Law of Diminishing Returns" states that

Accepted Answer

A) additional inputs will reduce output. 
B) additional inputs will decrease average productivity. 
C) the supply of inputs is becoming scarce. 
D) additional inputs will lead to less additional output. 
A) additional inputs will reduce output. 
B) additional inputs will decrease average productivity. 
C) the supply of inputs is becoming scarce. 
D) additional inputs will lead to less additional output.

Question 5

Which of the following is not one of the strengths of the Cobb-Douglas production function?

Accepted Answer

A) Both marginal product and returns to scale can be estimated from it. 
B) It can be converted into a linear function for ease of calculation. 
C) It shows a production function passing through increasing returns to constant returns and then to decreasing returns. 
D) The sum of the exponents indicates whether returns to scale are increasing,constant or decreasing. 
A) Both marginal product and returns to scale can be estimated from it. 
B) It can be converted into a linear function for ease of calculation. 
C) It shows a production function passing through increasing returns to constant returns and then to decreasing returns. 
D) The sum of the exponents indicates whether returns to scale are increasing,constant or decreasing.

Question 6

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

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 7

If a firm used a combination of inputs that was to the left of its isocost line,it would indicate that

Accepted Answer

A) it is exceeding its budget. 
B) it is not spending all of its budget. 
C) it is operating at its optimal point because it is saving money. 
D) None of the above 
A) it is exceeding its budget. 
B) it is not spending all of its budget. 
C) it is operating at its optimal point because it is saving money. 
D) None of the above

Question 8

The perfect substitution of two inputs implies that

Accepted Answer

A) two inputs can be substituted at a ratio of 1 to 1. 
B) one input can be substituted for another up to some point. 
C) two inputs can be substituted at some constant ratio. 
D) one input can be substituted for another. 
A) two inputs can be substituted at a ratio of 1 to 1. 
B) one input can be substituted for another up to some point. 
C) two inputs can be substituted at some constant ratio. 
D) one input can be substituted for another.

Question 9

If a firm finds itself operating in Stage I,it implies that

Accepted Answer

A) variable inputs are extremely expensive. 
B) it overinvested in fixed capacity. 
C) it underinvested in fixed capacity. 
D) fixed inputs are extremely expensive. 
A) variable inputs are extremely expensive. 
B) it overinvested in fixed capacity. 
C) it underinvested in fixed capacity. 
D) fixed inputs are extremely expensive.

Question 10

If a production function is given by the equation Q = 12X + 10X2 - X3,where Q = Output and X = Input,then calculate the equations for
a.average product
b.marginal product
c.point of diminishing average returns
d.point of diminishing marginal returns

Accepted Answer

a.AP = Q/X,or 12 + 10X - X² b.M

Increasing returns to scale result when

If the price of capital is $24,the price of labor is $15,and the marginal product of capital is 16,the least costly combination of capital and labor requires that the marginal product of labor be ________.

When the exponents of a Cobb-Douglas production function sum to more than 1,the function exhibits

The "Law of Diminishing Returns" states that

Which of the following is not one of the strengths of the Cobb-Douglas production function?

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

If a firm used a combination of inputs that was to the left of its isocost line,it would indicate that

The perfect substitution of two inputs implies that

If a firm finds itself operating in Stage I,it implies that

If a production function is given by the equation Q = 12X + 10X² - X³,where Q = Output and X = Input,then calculate the equations for a.average product b.marginal product c.point of diminishing average returns d.point of diminishing marginal returns

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

Increasing returns to scale result when

If the price of capital is $24,the price of labor is $15,and the marginal product of capital is 16,the least costly combination of capital and labor requires that the marginal product of labor be ________.

When the exponents of a Cobb-Douglas production function sum to more than 1,the function exhibits

The "Law of Diminishing Returns" states that

Which of the following is not one of the strengths of the Cobb-Douglas production function?

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

If a firm used a combination of inputs that was to the left of its isocost line,it would indicate that

The perfect substitution of two inputs implies that

If a firm finds itself operating in Stage I,it implies that

If a production function is given by the equation Q = 12X + 10X2 - X3,where Q = Output and X = Input,then calculate the equations for a.average product b.marginal product c.point of diminishing average returns d.point of diminishing marginal returns

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

If a production function is given by the equation Q = 12X + 10X² - X³,where Q = Output and X = Input,then calculate the equations for a.average product b.marginal product c.point of diminishing average returns d.point of diminishing marginal returns