Chapter 8: Production

Geometrically, the average product A. is the slope of the line joining the origin to the specified point on the total product curve. B. at any point is the slope of the total product curve at that point. C. is that point at which the total product curve exhibits diminishing returns. D. falls at low levels of input use and rises at high levels of input use.

A

If the contribution to output of an additional unit of the variable input exceeds the average contribution of the variable inputs used, A. the average contribution must rise. B. the average contribution must fall. C. the total product will begin to decline. D. the average product will be at its minimum.

A

If the owner of an ice-cream stand told a student looking for summer work that he would not hire him even if he worked for nothing, we can infer that A. the marginal product of the labor is zero or less. B. the average product of labor is rising. C. the marginal product of labor is rising. D. the owner is producing at the lowest cost.

A

In a short-run production function before diminishing returns set in, both MPL and APL will have A. positive slopes and MPL will lie above APL. B. positive slopes and APL will lie above MPL. C. negative slopes and MPL will lie above APL. D. negative slopes and APL will lie above MPL.

A

On an isoquant, the MRTS is defined as A. |ΔK/ΔL| B. MPK/MPL at the relevant point on the isoquant. C. MPL * MPK. D. MP + MPL.

A

Say you own a Mexican place that produces, among other things, Mexican burritos. The marginal product of your last worker was 5. If the marginal rate of technical substitution between capital and labor is 0.5, then marginal product of capital is A. 10. B. 5. C. 1. D. we can't say with the information given

A

The isoquant mapping for perfect complements in production is A. L-shaped. B. a straight line. C. a ray passing through the origin. D. concave.

A

A fixed input is an input that A. can never be varied. B. cannot be varied in the short-run. C. is fixed only for some quantities of output. D. can never be moved from one location to the next.

B

For production functions with decreasing returns to scale, a proportional increase in output A. requires a less-than-proportional growth in all inputs. B. requires a more-than-proportional growth in all inputs. C. exhibits diminishing returns. D. requires proportional growth in all inputs.

B

In a typical short-run production function, before diminishing returns set in, the slope of the total product curve A. is decreasing. B. is increasing. C. rises and then falls before diminishing returns sets in. D. falls and then rises before diminishing returns sets in.

B

In the production of bicycles an increase of 2 percent in the level of capital and labor respectively will generate an increase of 1 percent in the production of bicycles. From this information we know that the production of bicycles exhibits A. diminishing marginal returns. B. decreasing returns to scale. C. increasing returns to scale. D. constant returns to scale.

B

Suppose that at a firm's current level of production the marginal product of capital is equal to 10 units, while the marginal rate of technical substitution between capital and labor is 2. Given this, we know the marginal product of labor must be A. 5. B. 20. C. 10. D. It is not possible to say with the information given in the problem

B

The general rule for allocating a productive resource efficiently across different production activities of the same product, like fishing boats in the text case example, is to choose the allocation for which the A. average product of the resource is the same in every activity. B. marginal product of the resource is the same in every activity. C. total product of the resource is the same in every activity. D. average product is equal to the marginal product in every activity.

B

The rate at which one input can be exchanged for another without altering output is called A. the slope of the total product curve. B. the marginal rate of technical substitution. C. the slope of the marginal product of labor. D. the law of diminishing returns of labor.

B

Diminishing returns begin to occur when the A. slope of the ray from the origin reaches a maximum. B. total product curve reaches a maximum. C. slope of the total product curve reaches a maximum. D. marginal product curve intersects the average product curve.

C

If a chef and her equipment transform $50 worth of raw foodstuff into a meal with a total value of $150, the resulting output would be A. measured as the $150 total value. B. referred to as an intermediate product. C. measured as the $100 of value added. D. measured as $200 of value added.

C

If capital and labor are perfect substitutes in a production function, the isoquants for this function will be A. concave from above. B. convex from above. C. a straight line. D. any one of these depending on the particular combination of labor and capital employed.

C

The marginal product of a variable input is A. zero at the point of diminishing returns. B. the change in the average product that occurs when the variable input is increased one unit. C. the change in the total product that occurs in response to a unit change in the variable input. D. the second derivative of the total product function.

C

A production function for which proportional changes in all inputs leads to a more-than-proportional change in output is said to exhibit A. diminishing returns. B. decreasing returns to scale. C. constant returns to scale. D. increasing returns to scale.

D

For any constant returns production function, the isoquants for Q = 1, Q = 2, Q = 3, etc. will A. all be inversely proportional to the inputs. B. exhibit diminishing returns in the long run. C. be straight lines. D. be equally spaced, in that the distance between Q = 1 and Q = 2 is the same as Q = 2 and Q = 3, etc.

D

If equal amounts of a variable input are sequentially added to the fixed input in a typical production function, A. the increments to output will decrease first and then increase. B. the additions to output will be constant. C. increments to output will increase indefinitely. D. increments to output will first increase at an increasing rate and then at a decreasing rate.

D

In the long run A. all inputs are fixed. B. only capital inputs are fixed. C. all intermediate goods are fixed. D. all inputs are variable.

D