Econ Production

As we move downward along a typical isoquant, the slope of the isoquant A) becomes flatter. B) remains constant. C) becomes linear. D) becomes steeper.

A

Which of the following events would cause the production-possibilities curve to shift outward? A) A decrease in available resources. B) Increased efficiency in the use of resources. C) A labor strike. D) The full employment of resources.

B

Which of the following will cause the production-possibilities curve to shift inward? A) An increase in population. B) An increase in knowledge. C) A decrease in the size of the labor force. D) A technological advance.

C

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 A) Q / L. B) ΔL / ΔQ. C) Q ∙ L. D) ΔQ / ΔL.

D

Suppose we can describe the production function for the MC Shoe Co. with the equation, TP = 7L (where L = the number of workers). Based on this information, which of the following statements is true? A) The law of diminishing returns does not apply at the MC Shoe Co. B) The MC Shoe Co. will never experience economies of scale. C) The marginal physical product curve becomes negative at 7 workers. D) Diminishing returns begin after the seventh worker.

A

The production-possibilities curve shifts outward in response to: A) Better technology or more resources or both. B) Better technology or fewer resources or both. C) Declining technology or fewer resources or both. D) Declining technology or more resources or both.

A

With increasing returns to scale, isoquants for unit increases in output become A) closer and closer together. B) the same distance apart. C) none of these. D) farther and farther apart.

A

A production function matches a given combination of factor inputs with the: A) Maximum-cost method for combining the inputs. B) Maximum output that can be technologically produced from the inputs. C) Least cost of producing output. D) Lowest average cost of producing the output.

B

Economies of scale are reductions in average: A) Fixed cost that result from reducing the firm's scale of operations. B) Total cost that result from using operations of larger size. C) Total cost that result from declining average fixed costs. D) Fixed cost resulting from improved technology and production efficiency.

B

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: A) none of the other choices B) an isoquant. C) the average product. D) the total product. E) the marginal product.

B

A fixed input is an input whose quantity A) can be changed as output changes in the short run. B) all of the other choices. C) cannot be changed as output changes in the short run. D) cannot be changed as output changes in the long run. E) none of the other choices.

C

A production function: A) Expresses the least-cost method of producing a given level of output. B) Shows the cost of producing any level of output. C) Is a technological relationship between factors of production and output. D) Expresses our ability to produce various combinations of goods, using all of our resources.

C

Which of the following statements is true? A) The long run is any period of time over one year. B) The short run is always somewhere between six and twelve months. C) b and d D) In the short run, there are variable costs but no fixed costs. E) In the short run, changes in output can only be brought about by a change in the quantity of variable inputs.

E