Question 1

Refer to the following graph.The price of capital r)is $20.   Why wouldn't the firm choose to produce 5,000 units of output with the combination at A?

Accepted Answer

A) At A,MRTS K / r > MPL / w. 
C) At A,MPL > MPK. 
D) both a and b 
E) none of the above 
A) At A,MRTS K / r > MPL / w. 
C) At A,MPL > MPK. 
D) both a and b 
E) none of the above

Question 2

Refer to the following graph.The price of capital r)is $20.   What combination of K and L should the firm choose to produce 14,000 units of output at the lowest cost?

Accepted Answer

A) 180K,120L 
B) 180K,0L 
C) 60K,120L 
D) 90K,60L 
E) none of the above 
A) 180K,120L 
B) 180K,0L 
C) 60K,120L 
D) 90K,60L 
E) none of the above

Question 3

Refer to the following figure.The price of capital is $50 per unit:   How many units of labor should the firm use in order to produce 400 units of output at the least cost?

Accepted Answer

A) 100 
B) 105 
C) 110 
D) 115 
A) 100 
B) 105 
C) 110 
D) 115

Question 4

The marginal rate of technical substitution is

Accepted Answer

A) the rate at which the firm can substitute labor for capital while holding total cost constant. 
B) the rate at which the firm can substitute labor for capital while holding output constant. 
C) the slope of the isocost curve. 
D) both a and c 
E) none of the above 
A) the rate at which the firm can substitute labor for capital while holding total cost constant. 
B) the rate at which the firm can substitute labor for capital while holding output constant. 
C) the slope of the isocost curve. 
D) both a and c 
E) none of the above

Question 5

In the above graph,the shift from I to II was due to

Accepted Answer

A) an increase in total cost. 
B) an increase in the price of labor. 
C) a decrease in the price of labor. 
D) an increase in the price of capital. 
E) a decrease in the price of capital. 
A) an increase in total cost. 
B) an increase in the price of labor. 
C) a decrease in the price of labor. 
D) an increase in the price of capital. 
E) a decrease in the price of capital.

Question 6

Refer to the following figure.The price of capital is $50 per unit:   How many units of labor should the firm use to produce 1,200 units of output at least cost?

Accepted Answer

A) 120 
B) 500 
C) 240 
D) 128 
E) 175 
A) 120 
B) 500 
C) 240 
D) 128 
E) 175

Question 7

Refer to the following graph.The price of labor is $3 per unit:   What is the marginal rate of technical substitution at point B?

Accepted Answer

A) 0.6 
B) 0.75 
C) 1 
D) 1.7 
A) 0.6 
B) 0.75 
C) 1 
D) 1.7

Question 8

In the graph below,the price of capital is $500 per unit.Given a total cost of $50,000,the maximum amount of output possible is

Accepted Answer

A) 500 units of output. 
B) 1,100 units of output. 
C) 10,000 units of output. 
D) 50,000 units of output. 
E) none of the above 
A) 500 units of output. 
B) 1,100 units of output. 
C) 10,000 units of output. 
D) 50,000 units of output. 
E) none of the above

Question 9

Refer to the following graph.The price of capital r)is $20.   What is the price of labor w)?

Accepted Answer

A) $20 
B) $30 
C) $25 
D) $35 
E) none of the above 
A) $20 
B) $30 
C) $25 
D) $35 
E) none of the above

Question 10

Economies of scale exist when

Accepted Answer

A) total cost decreases as output increases. 
B) long-run average cost decreases as output increases. 
C) marginal cost decreases as output increases. 
D) fixed cost decreases as output increases. 
A) total cost decreases as output increases. 
B) long-run average cost decreases as output increases. 
C) marginal cost decreases as output increases. 
D) fixed cost decreases as output increases.

Question 11

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit.   When output is 20 units,what is long-run average cost?

Accepted Answer

A) $2 
B) $3.50 
C) $4 
D) $4.50 
E) none of the above 
A) $2 
B) $3.50 
C) $4 
D) $4.50 
E) none of the above

Question 12

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit.   When output is 30 units,what is long-run total cost?

Accepted Answer

A) $60 
B) $105 
C) $150 
D) $260 
E) none of the above 
A) $60 
B) $105 
C) $150 
D) $260 
E) none of the above

Question 13

The slope of an isoquant is

Accepted Answer

A) -∆K/∆L. 
B) MPL / MPK. 
C) the marginal rate of technical substitution . 
D) both a and b 
E) all of the above 
A) -∆K/∆L. 
B) MPL / MPK. 
C) the marginal rate of technical substitution . 
D) both a and b 
E) all of the above

Question 14

Suppose that when a firm increases output by 50%,long-run total cost increases by less than 50%.The firm will experience

Accepted Answer

A) diminishing marginal returns. 
B) decreasing marginal rate of technical substitution. 
C) economies of scale 
D) diseconomies of scale 
A) diminishing marginal returns. 
B) decreasing marginal rate of technical substitution. 
C) economies of scale 
D) diseconomies of scale

Question 15

Given the above graph,if the firm continues to produce 45 units of output and moves from point A to point B,it must be true that

Accepted Answer

A) the price of labor decreased relative to the price of capital. 
B) the price of capital decreased relative to the price of labor. 
C) the cost of producing 45 units decreased. 
D) both b and c 
E) none of these are true 
A) the price of labor decreased relative to the price of capital. 
B) the price of capital decreased relative to the price of labor. 
C) the cost of producing 45 units decreased. 
D) both b and c 
E) none of these are true

Question 16

In the following graph,the price of capital is $100 per unit; the price of labor is $25 per unit.When output is 20 units,what is AVERAGE cost?

Accepted Answer

A) $350 
B) $700 
C) $3,500 
D) $7,000 
E) none of the above 
A) $350 
B) $700 
C) $3,500 
D) $7,000 
E) none of the above

Question 17

-In the following graph,the price of capital is $100 per unit.Which of the following combinations of capital and labor lies on the expansion path?

Accepted Answer

A) 20K,60L 
B) 35K,140L 
C) 50K,200L 
D) all of the above 
E) none of the above 
A) 20K,60L 
B) 35K,140L 
C) 50K,200L 
D) all of the above 
E) none of the above

Question 18

Refer to the following figure.The price of capital is $50 per unit:   The minimum cost of producing 800 units of output is

Accepted Answer

A) $ 6,000. 
B) $ 7,500. 
C) $ 8,000. 
D) $10,000. 
A) $ 6,000. 
B) $ 7,500. 
C) $ 8,000. 
D) $10,000.

Question 19

In the graph below,the price of capital is $500 per unit.At point A,the firm can exchange

Accepted Answer

A) 1 unit of capital for 5 units of labor and keep output unchanged. 
B) 5 units of capital for 1 unit of labor and keep output unchanged. 
C) 5 units of capital for 1 unit of labor and keep cost unchanged. 
D) both b and c 
E) none of the above 
A) 1 unit of capital for 5 units of labor and keep output unchanged. 
B) 5 units of capital for 1 unit of labor and keep output unchanged. 
C) 5 units of capital for 1 unit of labor and keep cost unchanged. 
D) both b and c 
E) none of the above

Question 20

Given the above graph,as you move from input combination A to input combination C,

Accepted Answer

A) output is unchanged. 
B) cost is unchanged. 
C) the marginal rate of technical substitution increases. 
D) both a and b 
E) all of the above 
A) output is unchanged. 
B) cost is unchanged. 
C) the marginal rate of technical substitution increases. 
D) both a and b 
E) all of the above

Refer to the following graph.The price of capital r)is $20. Why wouldn't the firm choose to produce 5,000 units of output with the combination at A?

Refer to the following graph.The price of capital r)is $20. What combination of K and L should the firm choose to produce 14,000 units of output at the lowest cost?

Refer to the following figure.The price of capital is $50 per unit: How many units of labor should the firm use in order to produce 400 units of output at the least cost?

The marginal rate of technical substitution is

In the above graph,the shift from I to II was due to

Refer to the following figure.The price of capital is $50 per unit: How many units of labor should the firm use to produce 1,200 units of output at least cost?

Refer to the following graph.The price of labor is $3 per unit: What is the marginal rate of technical substitution at point B?

In the graph below,the price of capital is $500 per unit.Given a total cost of $50,000,the maximum amount of output possible is

Refer to the following graph.The price of capital r)is $20. What is the price of labor w)?

Economies of scale exist when

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit. When output is 20 units,what is long-run average cost?

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit. When output is 30 units,what is long-run total cost?

The slope of an isoquant is

Suppose that when a firm increases output by 50%,long-run total cost increases by less than 50%.The firm will experience

Given the above graph,if the firm continues to produce 45 units of output and moves from point A to point B,it must be true that

In the following graph,the price of capital is $100 per unit; the price of labor is $25 per unit.When output is 20 units,what is AVERAGE cost?

-In the following graph,the price of capital is $100 per unit.Which of the following combinations of capital and labor lies on the expansion path?

Refer to the following figure.The price of capital is $50 per unit: The minimum cost of producing 800 units of output is

In the graph below,the price of capital is $500 per unit.At point A,the firm can exchange

Given the above graph,as you move from input combination A to input combination C,

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 graph.The price of capital r)is $20. Why wouldn't the firm choose to produce 5,000 units of output with the combination at A?

Refer to the following graph.The price of capital r)is $20. What combination of K and L should the firm choose to produce 14,000 units of output at the lowest cost?

Refer to the following figure.The price of capital is $50 per unit: How many units of labor should the firm use in order to produce 400 units of output at the least cost?

The marginal rate of technical substitution is

In the above graph,the shift from I to II was due to

Refer to the following figure.The price of capital is $50 per unit: How many units of labor should the firm use to produce 1,200 units of output at least cost?

Refer to the following graph.The price of labor is $3 per unit: What is the marginal rate of technical substitution at point B?

In the graph below,the price of capital is $500 per unit.Given a total cost of $50,000,the maximum amount of output possible is

Refer to the following graph.The price of capital r)is $20. What is the price of labor w)?

Economies of scale exist when

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit. When output is 20 units,what is long-run average cost?

Following is a firm's expansion path.The price of capital is $5 per unit; the price of labor is $2 per unit. When output is 30 units,what is long-run total cost?

The slope of an isoquant is

Suppose that when a firm increases output by 50%,long-run total cost increases by less than 50%.The firm will experience

Given the above graph,if the firm continues to produce 45 units of output and moves from point A to point B,it must be true that

In the following graph,the price of capital is $100 per unit; the price of labor is $25 per unit.When output is 20 units,what is AVERAGE cost?

-In the following graph,the price of capital is $100 per unit.Which of the following combinations of capital and labor lies on the expansion path?

Refer to the following figure.The price of capital is $50 per unit: The minimum cost of producing 800 units of output is

In the graph below,the price of capital is $500 per unit.At point A,the firm can exchange

Given the above graph,as you move from input combination A to input combination C,

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