TB Questions

Which of the following inputs are variable in the long run

Labor, pants size, capital and equipment

WHich of the following ideas were central to the conclusions drawn by Thomas Malthus in his 1798 essay on the principle of population

Law of diminishing returns

Increasing returns to scale in production means

Less than twice as much of all inputs are required to. Double output

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

Linear

According to the law of diminishing returns

the marginal product of an input will eventually decline

An isoquant is

A curve that shows all the combination of inputs that yield the same total output

A function that indicates the maximum output per unit of time that a firm can produce for every combination of inputs with a given technology is called

A production function

The short run is

A time period in which at least one input is fixed

If the law of diminishing returns applies to labor then

After some level of employment the marginal product of labor must fall

Technological improvement

All of the above; can hide the presence of diminishing returns, can be shown as a shift in the total product curve, and allows more output to be produced with the same combination of inputs

Which would not increase the productivity of labor

An increase in the size of the labor force

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

An isoquant

Assume that the average product for six workers is 15. If the marginal product for the seventh worker is 18

Average product is rising

For consideration of such issues as labors productivity growth nationwide, the relevant measure is the

Average product of labor

As we move downward along a typical isoquant, the slope of the isoquant

Becomes flatter

If the isoquants in an isoquant map are downward sloping but bowed away from the origin (concave) then the production technology violates the assumption of:

Diminshing marginal returns

An upward sloping isoquant

Cannot be derived from a production function when a firm is assumed to maximize profits

An L shaped isoquant would indicate that

Capital and labor cannot be substituted for each other in production

Which of the following examples represents a fixed proportion production system with capital and labor inputs

Clerical staff and computers, airplanes and Pilots, horse drawn carriages and drivers

With increasing returns to scale, isoquants for unit increases in output become

Closer and closer together

Which scenario would lead to lower profits as we double the inputs used by the firm

Constant returns to scale with rising input prices

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

Costs to go up less than double as output doubles

In a production process, all inputs are increased by 10% but output increases less than 10% this means that the firm experiences

Decreasing returns to scale

An important factor that contributes to productivity growth is

Growth in capital stock, technological change

At a given level of labor employment, knowing the difference between the average product of labor and the marginal product of labor tells you

How increasing labor use alters the average product of labor

When the average product is decreasing, marginal product

Is less than average product

The function which shows combinations of inputs that yield the same output is called

Isoquant curve

A firm uses two factors of production. Irrespective of how much of each factor is used, both factors always have positive marginal products which imply that

Isoquant have negative slopes

A production function defines the output that can be produced

If the firm is technically efficient

The slope of the total product curve is the

Marginal product

What describes the graphical relationship between average product and marginal product?

Marginal product cuts average product from above, at the maximum point of average product

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 law of diminishing returns refers to diminishing

Marginal returns

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

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

For many firms capital is the production input that is typically fixed in the short run. Which of the following firms would face the longest time required to adjust its capital inputs?

Nuclear power plant

Which of the following production functions exhibits constant returns to scale?

Q=K+L

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

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

The marginal rate of technical substitution is equal to the

Ratio of the marginal products of the inputs

A production function assumes as given

Technology

The link between productivity of labor and the standard of living is

That over the long run consumers as a whole can increase their rate of consumption only by increasing labor productivity

The marginal rate of technical substitution is equal to

The absolute value of the slope of an isoquant, the ratio of the marginal products of the inputs

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

When labor uses age is at 12, output is 36 units. From this we may infer that

The average product of labor is 3

In a certain textile firm, labor is the only short term variable input. The manager notices that the marginal product of labor is the same for each unit of labor, which implies that

The average product of labor is always equal to the marginal product of labor

Which of the following is not related to the slope of isoquants

The fact that input prices are positive

If the isoquant are a straight line then

The marginal rate of technical substitution of inputs is constant

The law of diminishing returns applies to

The short run only

Law of diminishing returns assumes that

There is at least one fixed input

Two isoquant which represent different output levels but are derived from the same production function cannot cross because

This would violate a technical efficiency condition, additional inputs will not be used by profit maximizing forms if those inputs decrease output

Marginal product crosses the horizontal axis (is equal to 0) at the point where

Total product is maximized

A straight line isoquant

Would indicate that capital and labor are perfect substitutes in production

The MRTS for isoquants in a fixed proportion production function is

Zero or undefined

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

ΔD/ΔL