ECON 351 Chapter 8

Writing total output as Q, change in output as (Delta)Q, total labor employment as L, and hang in loabor employment as (Delta)L, the marginal product of labor can be written algebraically as?

(Delta)Q / (Delta)L

True or False: 1. 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. 2. 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.

1. False 2. False They are opposite definitions.

The marginal rate of technical substitution is equal to?

1. The absolute value of the slope of an isoquant. 2. The ratio of the marginal products of the inputs

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

An isoquant.

If input prices are constant, a tim with increasing returns to scale can expect?

Cost to go up less than double as out put doubles.

If input prices are constant, a firm with decreasing returns to scale can expect?

Costs to more than double as output doubles.

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 production function in which the inputs are perfectly substitutable would have isoquants that are?

Linear

The slope of the total product curve is the?

Marginal product

According to the law of diminishing returns...

The marginal product of an input will eventually decline.

If the isoquants are straight lines, then?

The marginal rate of technical su

The short run is?

a time period in which at least one input is fixed.

When the average product is decreasing, marginal product...

is less than average product.

If capital is measured on the vertical axis and labor is measured on the horizontal axis, the sloe of an isoquant can be interpreted as the?

marginal rate at which the firm can replace capital with labor without changing the output rate.

The law of diminishing returns refers to diminishing?

marginal returns

The marginal rate of technical substitution is equal to the?

ratio of the marginal products of the inputs.

A straight-line isoquant...

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

True or False: 1. Isoquants cannot cross one another. 2. An isoquant that is twice the distance from the origin represents twice the level of output.

1. True 2. False

True or False: 1. production functions describe what is technically feasible when the firm operates efficiently. 2. The production function shows the least cost method of producing a given level of output.

1. true 2. false

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 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.

If the law of diminishing returns applies to labor then...

after some level of employment, the marginal product of labor must fall.