Question 1

Use the following to answer question:
Table 6.1 
-(Table 6.1) Diminishing marginal returns to labor occur in production process _____, and diminishing marginal returns to capital occur in production process _____.

Accepted Answer

A)  1; 3 
B)  2; 1 
C)  2; 3 
D)  1; 1

Question 2

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by K and L, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

Accepted Answer

A)  decrease by 50%. 
B)  double. 
C)  increase by 50%. 
D)  increase fivefold.

Question 3

In the long run, because firms can adjust both capital and labor:

Accepted Answer

A)  firms will grow. 
B)  production is more expensive because firms must invest in both labor and capital. 
C)  the impact of diminishing marginal returns is lessened. 
D)  firms fire workers, replacing the labor productivity with capital.

Question 4

Solving for the value of the Lagrange multiplier in the firm's cost minimization problem tells us:

Accepted Answer

A)  average cost. 
B)  total cost. 
C)  marginal cost. 
D)  variable cost.

Question 5

Answer the following questions.

Accepted Answer

The answer of Answer the following questions. ...

Question 6

Which situation will likely give rise to diminishing marginal product of labor?

Accepted Answer

A)  Plasma television manufacturers are going out of business because of increased competition from LCD televisions. 
B)  Hell's Kitchen, which has enough counter space for three cooks per shift, decides to hire a fourth cook per shift. 
C)  Nevaeh's Kitchen undertakes a massive expansion, doubling both the size of its kitchen and number of cooks. 
D)  A landscaping firm replaces all of its self-propelled lawnmowers with push mowers.

Question 7

Suppose that a firm's production function is given by Q = KL (MP_K = L and MP_L = K), where Q is quantity of output, K is units of capital, and L is units of labor. The price per unit of labor and capital are $30 and $20, respectively.

Accepted Answer

The answer of Suppose that a firm's production function is...

Question 8

Use the following to answer question:
Table 6.7 
-(Table 6.7) Consider the production function that this table shows.

Accepted Answer

The answer of Use the following to answer question:
Table 6.7...

Question 9

Use the following to answer question:
Figure 6.4 
-(Figure 6.4) Put these four panels in order from the easiest case of input substitutability to the hardest case of input substitutability.

Accepted Answer

A)  b, a, c, d 
B)  a, c, d, b 
C)  d, c, a, b 
D)  a, d, c, b

Question 10

For the following questions assume that the marginal product of capital =  and the marginal product of labor =  .

Accepted Answer

The answer of For the following questions assume that the...

Question 11

The production function for a firm is Q = min(2K, L). The price per unit of capital is $40 and the price per unit of labor is $60.

Accepted Answer

The answer of The production function for a firm is...

Question 12

Consider the following production functions along with its corresponding marginal product of labor function.

Accepted Answer

The answer of Consider the following production functions along with...

Question 13

The McCue Corporation is a house-painting business. For a standard-sized house, it will use 4 painters applying paint by brush or two painters applying paint with 1 paint sprayer. Assume that a paint sprayer can be rented for $50 per day while workers are paid $75 per day. The production function exhibits constant returns to scale. The long-run production function for McCue Corporation will be _____ with a total cost equation of _____.

Accepted Answer

The answer of The McCue Corporation is a house-painting business....

Question 14

(Figure 6.3) Which of the following statements is (are) TRUE?

Accepted Answer

A)  It is easier for a small amount of additional labor to replace a large amount of capital at point A than at point B. 
B)  It is easier for a small amount of additional labor to replace a large amount of capital at point B than at point A. 
C)  The MRTSLK at point A equals MPK/MPL. 
D)  The MRTSLK at point B is greater the MRTSLK at point A.

Question 15

Consider the production function Q = (0.5K^1/3 + 0.5L^1/3)³ with a corresponding MRTS = K^2/3/L^2/3.

Accepted Answer

The answer of Consider the production function Q = (0.5K^1/3...

Question 16

Suppose the slope of a short-run production function is given by 2/L0.5. Which of the following statements is (are) TRUE?

Accepted Answer

A)  II and III 
B)  I and IV 
C)  III 
D)  I, II, and IV

Question 17

Use the following to answer question:
Figure 6.11 
-(Figure 6.11) Which of the following statements is (are) TRUE?

Accepted Answer

A)  I and IV 
B)  II and III 
C)  III and IV 
D)  I and III

Question 18

Suppose a firm with a production function given by Q = K0.25L0.75 produces 1,500 units of output. The firm pays a wage of $50 per unit and pays a rental rate of capital of $50 per unit. (Note:  ).
To minimize the cost of producing 1,500 units of output, the firm should use:

Accepted Answer

A)  3 times as many units of labor as units of capital. 
B)  equal amounts of labor and capital. 
C)  1.25 times as many units of capital as units of labor. 
D)  16 units of capital and 6,814 units of labor.

Question 19

A basic assumption of the short run is that a firm:

Accepted Answer

A)  can employ more workers and add more capital to the production process. 
B)  cannot adjust its workforce or the amount of capital it uses. 
C)  can reduce the number of workers it uses, but it cannot adjust how much capital it uses. 
D)  can freely adjust the amount of labor and capital that it employs.

Question 20

Suppose that a furniture manufacturer produces tables. The manufacturer's production function is Q(K,L) = 2K0.8L0.2, where K is the number of wood saws and L is the number of labor hours used to produce tables. The prevailing wage rate is $10 per hour and the rental rate associated with wood saws is $50. The manufacturer has a goal to produce 1,000 units. What Lagrangian equation can be used to solve the manufacturer's cost minimization problem?

Accepted Answer

A)   
B)   
C)   
D)

Exam 6: Producer Behavior

Use the following to answer question: Table 6.1 -(Table 6.1) Diminishing marginal returns to labor occur in production process _, and diminishing marginal returns to capital occur in production process _.

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by K and L, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

In the long run, because firms can adjust both capital and labor:

Solving for the value of the Lagrange multiplier in the firm's cost minimization problem tells us:

Answer the following questions.

Which situation will likely give rise to diminishing marginal product of labor?

Suppose that a firm's production function is given by Q = KL (MP_K = L and MP_L = K), where Q is quantity of output, K is units of capital, and L is units of labor. The price per unit of labor and capital are $30 and $20, respectively.

Use the following to answer question: Table 6.7 -(Table 6.7) Consider the production function that this table shows.

Use the following to answer question: Figure 6.4 -(Figure 6.4) Put these four panels in order from the easiest case of input substitutability to the hardest case of input substitutability.

For the following questions assume that the marginal product of capital = and the marginal product of labor = .

The production function for a firm is Q = min(2K, L). The price per unit of capital is $40 and the price per unit of labor is $60.

Consider the following production functions along with its corresponding marginal product of labor function.

(Figure 6.3) Which of the following statements is (are) TRUE?

Consider the production function Q = (0.5K^1/3 + 0.5L^1/3)³ with a corresponding MRTS = K^2/3/L^2/3.

Suppose the slope of a short-run production function is given by 2/L^0.5. Which of the following statements is (are) TRUE?

Use the following to answer question: Figure 6.11 -(Figure 6.11) Which of the following statements is (are) TRUE?

Suppose a firm with a production function given by Q = K^0.25L^0.75 produces 1,500 units of output. The firm pays a wage of $50 per unit and pays a rental rate of capital of $50 per unit. (Note: ) . To minimize the cost of producing 1,500 units of output, the firm should use:

A basic assumption of the short run is that a firm:

Exam 6: Producer Behavior

Use the following to answer question: Table 6.1 -(Table 6.1) Diminishing marginal returns to labor occur in production process _____, and diminishing marginal returns to capital occur in production process _____.

Suppose a firm is currently minimizing costs in the long run with marginal product of labor and marginal product of capital given by K and L, respectively. If the price of capital falls by 50%, the capital-to-labor ratio will:

In the long run, because firms can adjust both capital and labor:

Solving for the value of the Lagrange multiplier in the firm's cost minimization problem tells us:

Answer the following questions.

Which situation will likely give rise to diminishing marginal product of labor?

Suppose that a firm's production function is given by Q = KL (MPK = L and MPL = K), where Q is quantity of output, K is units of capital, and L is units of labor. The price per unit of labor and capital are $30 and $20, respectively.

Use the following to answer question: Table 6.7 -(Table 6.7) Consider the production function that this table shows.

Use the following to answer question: Figure 6.4 -(Figure 6.4) Put these four panels in order from the easiest case of input substitutability to the hardest case of input substitutability.

For the following questions assume that the marginal product of capital = and the marginal product of labor = .

The production function for a firm is Q = min(2K, L). The price per unit of capital is $40 and the price per unit of labor is $60.

Consider the following production functions along with its corresponding marginal product of labor function.

(Figure 6.3) Which of the following statements is (are) TRUE?

Consider the production function Q = (0.5K1/3 + 0.5L1/3)3 with a corresponding MRTS = K2/3/L2/3.

Suppose the slope of a short-run production function is given by 2/L0.5. Which of the following statements is (are) TRUE?

Use the following to answer question: Figure 6.11 -(Figure 6.11) Which of the following statements is (are) TRUE?

Suppose a firm with a production function given by Q = K0.25L0.75 produces 1,500 units of output. The firm pays a wage of $50 per unit and pays a rental rate of capital of $50 per unit. (Note: ) . To minimize the cost of producing 1,500 units of output, the firm should use:

A basic assumption of the short run is that a firm:

Use the following to answer question: Table 6.1 -(Table 6.1) Diminishing marginal returns to labor occur in production process _, and diminishing marginal returns to capital occur in production process _.

Suppose that a firm's production function is given by Q = KL (MP_K = L and MP_L = K), where Q is quantity of output, K is units of capital, and L is units of labor. The price per unit of labor and capital are $30 and $20, respectively.

Consider the production function Q = (0.5K^1/3 + 0.5L^1/3)³ with a corresponding MRTS = K^2/3/L^2/3.

Suppose the slope of a short-run production function is given by 2/L^0.5. Which of the following statements is (are) TRUE?

Suppose a firm with a production function given by Q = K^0.25L^0.75 produces 1,500 units of output. The firm pays a wage of $50 per unit and pays a rental rate of capital of $50 per unit. (Note: ) . To minimize the cost of producing 1,500 units of output, the firm should use: