CHAPTER 5 QUIZ

Suppose the production function is given by Q = 3K + 4L. What is the marginal product of capital when 10 units of capital and 10 units of labor are employed? A. 3 B. 4 C. 11 D. 45

A. 3

Which of the following cost functions exhibits economies of scope when three (3) units of good one and two (2) units of good two are produced? A. C = 50 − 5Q1Q2 + 0.5Q12 + Q22. B. C = 10 + 4Q1Q2 + Q12 + Q22. C. C = 15 + 5Q1Q2 + 2Q1 + 4Q2. D. C = 5 + Q1Q2 + Q12Q22.

A. C = 50 − 5Q1Q2 + 0.5Q12 + Q22.

Which of the following sets of economic data is minimizing the cost of producing a given level of output? A. MPL = 20, MPK = 40, w = $16, r = $32. B. MPL = 20, MPK = 40, w = $32, r = $16. C. MPL = 40, MPK = 20, w = $16, r = $32. D. MPL = 40, MPK = 40, w = $16, r = $32.

A. MPL = 20, MPK = 40, w = $16, r = $32.

You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 20, and MPK = 40 the firm: A. is cost minimizing. B. should use less L and more K to cost minimize. C. should use more L and less K to cost minimize. D. is profit maximizing but not cost minimizing.

C. should use more L and less K to cost minimize.

For the cost function C(Q) = 100 + 2Q + 3Q2, the total variable cost of producing 2 units of output is: A. 16. B. 12. C. 4. D. None of the answers are correct.

A. 16.

If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is: A. 2/5. B. 1/5. C. 10. D. None of the answers are correct.

B. 1/5.

For the cost function C(Q) = 100 + 2Q + 3Q2, the average fixed cost of producing 2 units of output is: A. 100. B. 50. C. 3. D. 2.

B. 50.

Suppose the production function is given by Q = K1/2L1/2, and that Q = 30 and K = 25. How much labor is employed by the firm? A. 49 B. 6 C. 36 D. 25

C. 36

Suppose the production function is given by Q = 3K + 4L. What is the average product of capital when 10 units of capital and 10 units of labor are employed? A. 3 B. 4 C. 7 D. 45

C. 7

For the cost function C(Q) = 100 + 2Q + 3Q2, the marginal cost of producing 2 units of output is: A. 2. B. 3. C. 12. D. 14.

D. 14.