Question 1

Refer to the following figure.The price of capital is $50 per unit:   What is the minimum cost of producing 400 units of output?

Accepted Answer

A) $3,000 
B) $4,000 
C) $5,000 
D) $6,000 
E) none of the above 
A) $3,000 
B) $4,000 
C) $5,000 
D) $6,000 
E) none of the above C

Question 2

Economies of scope in the production of goods G and W exist if

Accepted Answer

A)    
B)    
C)    
D) both a and c 
E) both b and c 
A)    
B)    
C)    
D) both a and c 
E) both b and c E

Question 3

A producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.Beginning at A,if the producer increases labor by one unit and decreases capital by 1 unit,then

Accepted Answer

A) cost remains constant and output increases by 20 units. 
B) cost remains constant and output decreases by 20 units. 
C) output remains constant and cost increases by $8. 
D) output remains constant and cost decreases by $8. 
E) both cost and output remain constant. 
A) cost remains constant and output increases by 20 units. 
B) cost remains constant and output decreases by 20 units. 
C) output remains constant and cost increases by $8. 
D) output remains constant and cost decreases by $8. 
E) both cost and output remain constant. C

Question 4

In the following graph,the price of capital is $12 per unit.If the price of labor is $30 per unit,the lowest possible cost of producing 200 units of output is

Accepted Answer

A) $1,200. 
B) $2,400. 
C) $3,000. 
D) $4,000. 
E) none of the above 
A) $1,200. 
B) $2,400. 
C) $3,000. 
D) $4,000. 
E) none of the above

Question 5

A publishing house is using 400 printers and 200 printing presses to produce books.The printers' wage rate is $20 and the price of a printing press is $100.The last printer added 20 books to total output,while the last printing press added 50 books to total output.The publishing house

Accepted Answer

A) is using the cost-minimizing combination of printers and printing presses. 
B) should use more printers because they are cheaper than printing presses. 
C) should use more printing presses because they are more productive than printers. 
D) could produce the same number of books at a lower cost by using more printing presses and fewer printers. 
E) could produce the same number of books at a lower cost by using more printers and fewer printing presses. 
A) is using the cost-minimizing combination of printers and printing presses. 
B) should use more printers because they are cheaper than printing presses. 
C) should use more printing presses because they are more productive than printers. 
D) could produce the same number of books at a lower cost by using more printing presses and fewer printers. 
E) could produce the same number of books at a lower cost by using more printers and fewer printing presses.

Question 6

A firm is using 500 units of labor and 100 units of capital to produce 100 units of output.Labor costs $5 per unit and capital $20 per unit.At these input levels,another unit of labor adds 5 units of output,while another unit of capital adds 40 units of output.If the firm uses 496 units of labor and 101 units of capital instead,what will happen?

Accepted Answer

A) Cost will be unchanged,and output will increase by 20 units. 
B) Cost will be unchanged,and output will increase by 35 units. 
C) Output will be unchanged,and cost will decrease by $20. 
D) Output will be unchanged,and cost will decrease by $40. 
A) Cost will be unchanged,and output will increase by 20 units. 
B) Cost will be unchanged,and output will increase by 35 units. 
C) Output will be unchanged,and cost will decrease by $20. 
D) Output will be unchanged,and cost will decrease by $40.

Question 7

A firm is using 500 units of labor and 100 units of capital to produce 100 units of output.The price of labor is $5 per unit and the price of capital is $20 per unit.At these input levels,another unit of labor adds 50 units of output,while another unit of capital adds 400 units of output.The firm could increase output by

Accepted Answer

A) 10 units by spending $1 more on capital and $1 less on labor. 
B) 10 units by spending $1 more on labor and $1 less on capital. 
C) 350 units by spending $1 more on capital and $1 less on labor. 
D) 350 units by spending $1 more on labor and $1 less on capital. 
E) none of the above 
A) 10 units by spending $1 more on capital and $1 less on labor. 
B) 10 units by spending $1 more on labor and $1 less on capital. 
C) 350 units by spending $1 more on capital and $1 less on labor. 
D) 350 units by spending $1 more on labor and $1 less on capital. 
E) none of the above

Question 8

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit.   How much does the 10th unit of output add to long-run total cost?

Accepted Answer

A) zero 
B) $3 
C) $4 
D) $40 
E) none of the above 
A) zero 
B) $3 
C) $4 
D) $40 
E) none of the above

Question 9

Learning economies differ from economies of scale because

Accepted Answer

A) the former involves rising average costs and the latter involves falling average costs as a result of higher output levels. 
B) the former involves output in a single period of production and the latter involves cumulative output. 
C) the former involves cumulative production and the latter involves rate of production per period. 
D) the first is a short-run phenomenon and the second is a long-run phenomenon. 
A) the former involves rising average costs and the latter involves falling average costs as a result of higher output levels. 
B) the former involves output in a single period of production and the latter involves cumulative output. 
C) the former involves cumulative production and the latter involves rate of production per period. 
D) the first is a short-run phenomenon and the second is a long-run phenomenon.

Question 10

Which of the following is FALSE?

Accepted Answer

A) A change in input prices shifts the isoquant map. 
B) Convex isoquants mean that the marginal rate of technical substitution decreases as the firm substitutes labor for capital. 
C) A change in cost shifts the isocost curve. 
D) At the optimal input choice,the rate at which the firm can substitute labor for capital in production is equal to the rate at which the firm can substitute labor for capital in the market. 
E) none of the above. 
A) A change in input prices shifts the isoquant map. 
B) Convex isoquants mean that the marginal rate of technical substitution decreases as the firm substitutes labor for capital. 
C) A change in cost shifts the isocost curve. 
D) At the optimal input choice,the rate at which the firm can substitute labor for capital in production is equal to the rate at which the firm can substitute labor for capital in the market. 
E) none of the above.

Question 11

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.The producer

Accepted Answer

A) is using the optimal combination of capital and labor. 
B) should use more labor and less capital. 
C) should use more capital and less labor. 
D) cannot determine without more information. 
A) is using the optimal combination of capital and labor. 
B) should use more labor and less capital. 
C) should use more capital and less labor. 
D) cannot determine without more information.

Question 12

-In the following graph,the price of capital is $100 per unit.If a firm decides that total cost must not exceed $3,500,what is the maximum amount of output it can produce?

Accepted Answer

A) 100 
B) 500 
C) 1,000 
D) 1,500 
E) none of the above 
A) 100 
B) 500 
C) 1,000 
D) 1,500 
E) none of the above

Question 13

Given the above graph,what is the marginal rate of technical substitution at point A?

Accepted Answer

A) 0.3 
B) 1 
C) 1.125 
D) 1.67 
E) none of the above 
A) 0.3 
B) 1 
C) 1.125 
D) 1.67 
E) none of the above

Question 14

A firm is using 500 units of capital and 200 units of labor to produce 10,000 units of output. Capital costs $100 per unit and labor $20 per unit.The last unit of capital added 50 units of output,while the last unit of labor added 20 units of output.The firm

Accepted Answer

A) is using the cost-minimizing combination of capital and labor. 
B) should use more of both inputs in equal proportions. 
C) should use less of both inputs in equal proportions. 
D) could produce the same level of output at a lower cost by using more capital and less labor. 
E) could produce the same output at a lower cost by using less capital and more labor. 
A) is using the cost-minimizing combination of capital and labor. 
B) should use more of both inputs in equal proportions. 
C) should use less of both inputs in equal proportions. 
D) could produce the same level of output at a lower cost by using more capital and less labor. 
E) could produce the same output at a lower cost by using less capital and more labor.

Question 15

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.Beginning at A,if the producer increases expenditures on labor by $1 and decreases expenditures on capital by $1,then

Accepted Answer

A) cost remains constant and output decreases by 8 units. 
B) cost remains constant and output increases by 12 units. 
C) cost remains constant and output increases by 20 units. 
D) output remains constant and cost increases by $8. 
E) output remains constant and cost decreases by $2. 
A) cost remains constant and output decreases by 8 units. 
B) cost remains constant and output increases by 12 units. 
C) cost remains constant and output increases by 20 units. 
D) output remains constant and cost increases by $8. 
E) output remains constant and cost decreases by $2.

Question 16

In the above graph,what is the marginal rate of technical substitution at point D?

Accepted Answer

A) less than 1.5 
B) less than 2.5 
C) greater than 1.5 
D) greater than 2.5 
A) less than 1.5 
B) less than 2.5 
C) greater than 1.5 
D) greater than 2.5

Question 17

In the following graph,the price of capital is $12 per unit.How many units of labor should the firm use in order to produce 200 units of output at the least cost?

Accepted Answer

A) 12 units of labor 
B) 18 units of labor 
C) 30 units of labor 
D) 40 units of labor 
E) 22 units of labor 
A) 12 units of labor 
B) 18 units of labor 
C) 30 units of labor 
D) 40 units of labor 
E) 22 units of labor

Question 18

Refer to the following graph.The price of capital r)is $20.   If,at the optimal combination of inputs for producing 14,000 units of output,the marginal product of capital is 40,what is the marginal product of labor?

Accepted Answer

A) 60 
B) 40 
C) 27.7 
D) 80 
E) impossible to tell from the graph 
A) 60 
B) 40 
C) 27.7 
D) 80 
E) impossible to tell from the graph

Question 19

In the following graph,the price of capital is $100 per unit.How many units of capital should a firm use in order to produce 500 units of output at the least cost?

Accepted Answer

A) 10 units of capital 
B) 12 units of capital 
C) 14 units of capital 
D) 20 units of capital 
E) none of the above 
A) 10 units of capital 
B) 12 units of capital 
C) 14 units of capital 
D) 20 units of capital 
E) none of the above

Question 20

A cow will produce 8500 lbs.of milk if fed either 5000 lbs.of hay and 6200 lbs.of grain or 5600 lbs.of hay and 5400 lbs.of grain.Over this range,the marginal rate of technical substitution between hay and grain is

Accepted Answer

A) 0.17. 
B) 0.75. 
C) 0.98. 
D) 1.02. 
E) 6.00. 
A) 0.17. 
B) 0.75. 
C) 0.98. 
D) 1.02. 
E) 6.00.

Refer to the following figure.The price of capital is $50 per unit: What is the minimum cost of producing 400 units of output?

Economies of scope in the production of goods G and W exist if

A producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.Beginning at A,if the producer increases labor by one unit and decreases capital by 1 unit,then

In the following graph,the price of capital is $12 per unit.If the price of labor is $30 per unit,the lowest possible cost of producing 200 units of output is

A publishing house is using 400 printers and 200 printing presses to produce books.The printers' wage rate is $20 and the price of a printing press is $100.The last printer added 20 books to total output,while the last printing press added 50 books to total output.The publishing house

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit. How much does the 10th unit of output add to long-run total cost?

Learning economies differ from economies of scale because

Which of the following is FALSE?

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.The producer

-In the following graph,the price of capital is $100 per unit.If a firm decides that total cost must not exceed $3,500,what is the maximum amount of output it can produce?

Given the above graph,what is the marginal rate of technical substitution at point A?

A firm is using 500 units of capital and 200 units of labor to produce 10,000 units of output. Capital costs $100 per unit and labor $20 per unit.The last unit of capital added 50 units of output,while the last unit of labor added 20 units of output.The firm

In the above graph,what is the marginal rate of technical substitution at point D?

In the following graph,the price of capital is $12 per unit.How many units of labor should the firm use in order to produce 200 units of output at the least cost?

Refer to the following graph.The price of capital r)is $20. If,at the optimal combination of inputs for producing 14,000 units of output,the marginal product of capital is 40,what is the marginal product of labor?

In the following graph,the price of capital is $100 per unit.How many units of capital should a firm use in order to produce 500 units of output at the least cost?

A cow will produce 8500 lbs.of milk if fed either 5000 lbs.of hay and 6200 lbs.of grain or 5600 lbs.of hay and 5400 lbs.of grain.Over this range,the marginal rate of technical substitution between hay and grain is

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 9: Production and Cost in the Long Run

Refer to the following figure.The price of capital is $50 per unit: What is the minimum cost of producing 400 units of output?

Economies of scope in the production of goods G and W exist if

A producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.Beginning at A,if the producer increases labor by one unit and decreases capital by 1 unit,then

In the following graph,the price of capital is $12 per unit.If the price of labor is $30 per unit,the lowest possible cost of producing 200 units of output is

A publishing house is using 400 printers and 200 printing presses to produce books.The printers' wage rate is $20 and the price of a printing press is $100.The last printer added 20 books to total output,while the last printing press added 50 books to total output.The publishing house

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit. How much does the 10th unit of output add to long-run total cost?

Learning economies differ from economies of scale because

Which of the following is FALSE?

producer is hiring 20 units of labor and 6 units of capital bundle A).The price of labor is $10,the price of capital is $2,and at A,the marginal products of labor and capital are both equal to 20.The producer

-In the following graph,the price of capital is $100 per unit.If a firm decides that total cost must not exceed $3,500,what is the maximum amount of output it can produce?

Given the above graph,what is the marginal rate of technical substitution at point A?

A firm is using 500 units of capital and 200 units of labor to produce 10,000 units of output. Capital costs $100 per unit and labor $20 per unit.The last unit of capital added 50 units of output,while the last unit of labor added 20 units of output.The firm

In the above graph,what is the marginal rate of technical substitution at point D?

In the following graph,the price of capital is $12 per unit.How many units of labor should the firm use in order to produce 200 units of output at the least cost?

Refer to the following graph.The price of capital r)is $20. If,at the optimal combination of inputs for producing 14,000 units of output,the marginal product of capital is 40,what is the marginal product of labor?

In the following graph,the price of capital is $100 per unit.How many units of capital should a firm use in order to produce 500 units of output at the least cost?

A cow will produce 8500 lbs.of milk if fed either 5000 lbs.of hay and 6200 lbs.of grain or 5600 lbs.of hay and 5400 lbs.of grain.Over this range,the marginal rate of technical substitution between hay and grain is

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters