TB Questions
Which of the following inputs are variable in the long run
Labor, pants size, capital and equipment
WHich of the following ideas were central to the conclusions drawn by Thomas Malthus in his 1798 essay on the principle of population
Law of diminishing returns
Increasing returns to scale in production means
Less than twice as much of all inputs are required to. Double output
A production function in which the inputs are perfectly substitutable would have isoquants that are
Linear
According to the law of diminishing returns
the marginal product of an input will eventually decline
An isoquant is
A curve that shows all the combination of inputs that yield the same total output
A function that indicates the maximum output per unit of time that a firm can produce for every combination of inputs with a given technology is called
A production function
The short run is
A time period in which at least one input is fixed
If the law of diminishing returns applies to labor then
After some level of employment the marginal product of labor must fall
Technological improvement
All of the above; can hide the presence of diminishing returns, can be shown as a shift in the total product curve, and allows more output to be produced with the same combination of inputs
Which would not increase the productivity of labor
An increase in the size of the labor force
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 the average product for six workers is 15. If the marginal product for the seventh worker is 18
Average product is rising
For consideration of such issues as labors productivity growth nationwide, the relevant measure is the
Average product of labor
As we move downward along a typical isoquant, the slope of the isoquant
Becomes flatter
If the isoquants in an isoquant map are downward sloping but bowed away from the origin (concave) then the production technology violates the assumption of:
Diminshing marginal returns
An upward sloping isoquant
Cannot be derived from a production function when a firm is assumed to maximize profits
An L shaped isoquant would indicate that
Capital and labor cannot be substituted for each other in production
Which of the following examples represents a fixed proportion production system with capital and labor inputs
Clerical staff and computers, airplanes and Pilots, horse drawn carriages and drivers
With increasing returns to scale, isoquants for unit increases in output become
Closer and closer together
Which scenario would lead to lower profits as we double the inputs used by the firm
Constant returns to scale with rising input prices
If input prices are constant, a firm with increasing returns to scale can expect
Costs to go up less than double as output doubles
In a production process, all inputs are increased by 10% but output increases less than 10% this means that the firm experiences
Decreasing returns to scale
An important factor that contributes to productivity growth is
Growth in capital stock, technological change
At a given level of labor employment, knowing the difference between the average product of labor and the marginal product of labor tells you
How increasing labor use alters the average product of labor
When the average product is decreasing, marginal product
Is less than average product
The function which shows combinations of inputs that yield the same output is called
Isoquant curve
A firm uses two factors of production. Irrespective of how much of each factor is used, both factors always have positive marginal products which imply that
Isoquant have negative slopes
A production function defines the output that can be produced
If the firm is technically efficient
The slope of the total product curve is the
Marginal product
What describes the graphical relationship between average product and marginal product?
Marginal product cuts average product from above, at the maximum point of average product
The rate at which one input can be reduced per additional unit of the other input, while holding output constant is measured by the
Marginal rate of technical substitution
THe law of diminishing returns refers to diminishing
Marginal returns
Does it make sense to consider the returns to scale in a production function in the short run?
No, we cannot change all of the production inputs in the short run
For many firms capital is the production input that is typically fixed in the short run. Which of the following firms would face the longest time required to adjust its capital inputs?
Nuclear power plant
Which of the following production functions exhibits constant returns to scale?
Q=K+L
If capital is measured on the vertical axis and labor is measured on the horizontal axis, the slope of an isoquant can be interpreted as the
Rate at which the firm can replace capital with labor without changing the output rate
The marginal rate of technical substitution is equal to the
Ratio of the marginal products of the inputs
A production function assumes as given
Technology
The link between productivity of labor and the standard of living is
That over the long run consumers as a whole can increase their rate of consumption only by increasing labor productivity
The marginal rate of technical substitution is equal to
The absolute value of the slope of an isoquant, the ratio of the marginal products of the inputs
The marginal product of an input is
The addition to total output due to the addition of the last unit of an input, holding all other inputs constant
When labor uses age is at 12, output is 36 units. From this we may infer that
The average product of labor is 3
In a certain textile firm, labor is the only short term variable input. The manager notices that the marginal product of labor is the same for each unit of labor, which implies that
The average product of labor is always equal to the marginal product of labor
Which of the following is not related to the slope of isoquants
The fact that input prices are positive
If the isoquant are a straight line then
The marginal rate of technical substitution of inputs is constant
The law of diminishing returns applies to
The short run only
Law of diminishing returns assumes that
There is at least one fixed input
Two isoquant which represent different output levels but are derived from the same production function cannot cross because
This would violate a technical efficiency condition, additional inputs will not be used by profit maximizing forms if those inputs decrease output
Marginal product crosses the horizontal axis (is equal to 0) at the point where
Total product is maximized
A straight line isoquant
Would indicate that capital and labor are perfect substitutes in production
The MRTS for isoquants in a fixed proportion production function is
Zero or undefined
Writing total output as Q, change in output as ΔQ total labor employment as L, and change in labor employment as ΔL, the marginal product of labor can be written algebraically as
ΔD/ΔL