ECON Ch 6

Joe owns a coffee house and produces coffee drinks under the production function q = 5KL where q is the number of cups generated per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). What is the average product of labor?

AP = 5K

Use the following two statements to answer this question: I. The marginal product of labor is the slope of the line from the origin to the total product curve at that level of labor usage. II The average product of labor is the slope of the line that is tangent to the total product curve at that level of labor usage.

Both I and II are false

Use the following two statements to answer this question: I. "Decreasing returns to scale" and "diminishing returns to a factor of production" are two phrases that mean the same thing. II Diminishing returns to all factors of production implies decreasing returns to scale.

Both I and II are false.

Consider the following statements when answering this question; I. Whenever the marginal product of labor curve is a downward sloping curve, the average product of labor curve is also a downward sloping curve that lies above the marginal product of labor curve. II. If a firm uses only labor to produce, and the production function is given by a straight line, then the marginal product of labor always equals the average product of labor as labor employment expands.

I is false, and II is true

Use the following two statements to answer this question: I. Production functions describe what is technically feasible when the firm operates efficiently. II. The production function shows the least cost method of producing a given level of output

I is true, and II is false.

Joe owns a coffee house and produces coffee drinks under the production function q = 5KL where q is the number of cups generated per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). What is the marginal product of labor?

MP = 5K

Joe owns a coffee house and produces coffee drinks under the production function q = 5KL where q is the number of cups generated per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). The average product of labor and the marginal product of labor are both equal to AP = MP = 5K. Does labor exhibit diminishing marginal returns in this case?

No, the marginal product of labor is constant (for a given K).

If we take the production function and hold the level of output constant, allowing the amounts of capital and labor to vary, the curve that is traced out is called:

an isoquant.

Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is eighteen,

average product is rising

As we move downward along a typical isoquant, the slope of the isoquant

becomes flatter.

Technological improvement

can hide the presence of diminishing returns can be shown as a shift in the total product curve. allows more output to be produced with the same combination of inputs.

A farmer uses M units of machinery and L hours of labor to produce C tons of corn, with the following production function This production function exhibits

increasing returns to scale for all output levels

Joe owns a small coffee shop, and his production function is q = K1/2L1/2 where q is total output in cups per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). If Joe's capital is currently fixed at K=9 machines, what is his short-run production function?

q = 3L^1/2

Which of the following production functions exhibits constant returns to scale?

q = K + L

When labor usage is at 12 units, output is 36 units. From this we may infer that

the average product of labor is 3.

The marginal rate of technical substitution is equal to:

the ratio of the prices of the inputs.

The law of diminishing returns assumes that

there is at least one fixed input

A straight-line isoquant

would indicate that capital and labor are perfect substitutes in production

Writing total output as Q, change in output as △Q, total labor employment as L, and change in labor employment as △L, the marginal product of labor can be written algebraically as

ΔQ / ΔL