ch6 6.3-

If the isoquants in an isoquant map are downward sloping but bowed away from the origin (i.e., concave to the origin), then the production technology violates the assumption of:

diminishing marginal returns.

An isoquant

is a curve that shows all the combinations of inputs that yield the same total output.

The function which shows combinations of inputs that yield the same output is called a(n)

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

isoquants have negative slope

If the isoquants are straight lines, then

the marginal rate of technical substitution of inputs is constant.

The marginal rate of technical substitution is equal to:

A) the absolute value of the slope of an isoquant. B) the ratio of the marginal products of the inputs.

An examination of the production isoquants in the diagram below reveals that: (two downward slope straight lines)

B) capital and labor are perfectly substitutable. C) except at the corners of the isoquants the MRTS is constant.

Two isoquants, which represent different output levels but are derived from the same production function, cannot cross because

B) this would violate a technical efficiency condition D) additional inputs will not be used by profit maximizing firms if those inputs decrease output

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.

Use the following statements to answer this question. I. The numerical labels attached to indifference curves are meaningful only in an ordinal way. II. The numerical labels attached to isoquants are meaningful only in an ordinal way.

I is true, and II is false.

Use the following two statements to answer this question: I. If the marginal product of labor is zero, the total product of labor is at its maximum. II If the marginal product of labor is at its maximum, the average product of labor is falling.

I is true, and II is false.

Use the following two statements to answer this question: I. Isoquants cannot cross one another. II. An isoquant that is twice the distance from the origin represents twice the level of output.

I is true, and II is false.

Which of the following is NOT related to the slope of isoquants?

The fact that input prices are positive

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.

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

becomes flatter.

An upward sloping isoquant

cannot be derived from a production function when a firm is assumed to maximize profits

An examination of the production isoquants in the diagram below reveals that: (two 3 L shape lines)

capital and labor will be used in fixed proportions.

With increasing returns to scale, isoquants for unit increases in output become

closer and closer together

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

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.

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 firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one unit of labor, but does not want its output quantity to change, the firm should

use 0.8 fewer units of capital.

A straight-line isoquant

would indicate that capital and labor are perfect substitutes in production.

An L-shaped isoquant

would indicate that capital and labor cannot be substituted for each other in production

The MRTS for isoquants in a fixed-proportion production function is:

zero or undefined.