Chapter 5

When a profit-maximizing firm undertakes production in more than one plant, it will allocate a fixed level of inputs such that....

the marginal product is equal across plants

Which of the following is true in the long-run

A firm can vary all the inputs used in production

Which of the following is true of a firm that faces increasing returns to scale?

A given increase in the quantity of all inputs will increase output by a greater proportion

Which of the following correctly describes a production isoquant?

An isoquant is a curve that shows all possible combinations of inputs that can produce a given level of output

When the marginal product of variable input is zero, it implies that the firm is at the point where total product is:

At its maximum

The marginal product of labor initially rises as more labor is emplyed because of:

Division and specialization of labor

If the sum of the exponents of a Cobb-Douglas production function is equal to 1.2, the production function exhibits:

Increasing returns to scale

Which of the following correctly defines the marginal production of labor?

It is the additional output produced by an additional unit of labor, all other factors held constant

A profit-Maximizing firm will hire the variable input, labor, until the point where...

Marginal Revenue product of labor= Marginal Cost of Labor

The short-run is best defined as the time period in which:

One or more inputs to production are fixed

A firm's production function shows:

The Maximum level of output the firm can produce for any combination of inputs

Which of the following is true of fixed-proportions production?

The inputs used in production are perfect complements

Which of the following identifies the optimal usage of inputs by a profit-maximizing firm?

The marginal product of labor/price=Marginal Product of Capital/Price of capital

The marginal revenue product of labor is equal to the product of:

The marginal revenue per unit of output and the marginal product of labor

What does the law of diminishing marginal returns state?

When one input is increased, with all other inputs unchanged, the marginal product of the input will eventually decline

When a firm faces constant returns to scale, a proportionate increase in all inputs

Will increase output by the same proportion as the increase in inputs

Out put elasticity is the percentage change in output thatresultss from a 1% increase in...

all the inputs