6.3 & 6.4

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

isoquant curve

increasing returns to scale in production means:

less than twice as much of all inputs are required to double output

does it make sense to consider the returns to scale of a production function in the short run?

no, we cannot change all of the production inputs in the short run

the marginal rate of technical substitution is equal to the:

ratio of the marginal products of the inputs

an L-shaped isoquant:

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

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. A. I is true, and II is false. B. I is false, and II is true. C. both I and II are false. D. Both I and II are true.

A. I is true, and II is false

which of the following is NOT related to the slope of isoquants? A. the fact that inputs have diminishing marginal product B. the fact that more of either input increases output C. the fact that there are diminishing returns to inputs D. the fact that inputs have positive marginal product

B. the fact that more of either input increases output

A construction company builds roads with machinery (capital, K) and labor (L). If we plot the isoquants for the production function so that labor is on the horizontal axis, then a point on the isoquant with a small MRTS (in absolute value) is associated with high ____ use and low ____ use. A. none of the above B. capital; labor C. concrete; graval D. labor; capital

D. labor; capital

the marginal rate of technical substitution is equal to: A. the absolute value of the slope of an isoquant. B. the ratio of the prices of the inputs. C. all of the above. D. the ratio of the marginal products of the inputs. E. A and B only.

D. the ratio of the marginal products of the inputs

according to the diagram, where each isoquant's output level is marked to the right of the isoquant, production is characterized by:

increasing returns to scale