Chapter 6 quiz bank

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

(WRONG) that over the long run, consumers' rate of consumption is not related to labor productivity

A farmer uses M units of machinery and L hours of labor to produce C tons of corn, with the following production function This production function exhibits

decreasing returns to scale for all levels of output

Which of the following actions is not an example of the production coordination provided by firms?

Establish industry safety regulations

Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is eighteen,

average product is rising

The Malthusian dilemma relates to marginal product in that

because of diminishing marginal product, the amount of food produced by each additional member of the population decreases

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

The marginal rate of technical substitution is equal to:

A and B only

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

All of the above

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

Both B and D are true

Consider the following statements when answering this question; I. If a technology exhibits diminishing returns then it also exhibits decreasing return to scale. II. If a technology exhibits decreasing returns to scale then it also exhibits diminishing returns.

Both I and II are false

Use the following two statements to answer this question: I. "Decreasing returns to scale" and "diminishing returns to a factor of production" are two phrases that mean the same thing. II Diminishing returns to all factors of production implies decreasing returns to scale.

Both I and II are false

Use the following two statements to answer this question: I. The marginal product of labor is the slope of the line from the origin to the total product curve at that level of labor usage. II The average product of labor is the slope of the line that is tangent to the total product curve at that level of labor usage.

Both I and II are false

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

Closer and closer together

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

Constant returns to scale with rising inout prices (perhaps because the firm is not a price-taker in the snout markets)

Consider the following statements when answering this question; I. Suppose a semiconductor chip factory uses a technology where the average product of labor is constant for all employment levels. This technology obeys the law of diminishing returns. II. Suppose a semiconductor chip factory uses a technology where the marginal product of labor rises, then is constant and finally falls as employment increases. This technology obeys the law of diminishing returns.

I is false, II is true

Consider the following statements when answering this question; I. Whenever the marginal product of labor curve is a downward sloping curve, the average product of labor curve is also a downward sloping curve that lies above the marginal product of labor curve. II. If a firm uses only labor to produce, and the production function is given by a straight line, then the marginal product of labor always equals the average product of labor as labor employment expands.

I is false, and II is true

Use the following two statements to answer this question: I. Production functions describe what is technically feasible when the firm operates efficiently. II. The production function shows the least cost method of producing a given level of output.

I is true and II is false

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

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

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

Technological improvement

all

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

becomes flatter

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

costs to go up less than double as output doubles

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 creasing labor use alters the average product of labor

A production function defines the output that can be produced

if the firm is technically efficient

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

The law of diminishing returns refers to diminishing

marginal returns

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

q= K+L

Joe owns a small coffee shop, and his production function is q = 3KL where q is total output in cups per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). If Joe's capital is currently fixed at K=3 machines, what is his short-run production function?

q=9L

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

We manufacturer automobiles given the production function q = 5KL where q is the number of autos assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L is the number of workers hired per hour (labor). If we use K=10 robots and L=10 workers in order to produce q = 450 autos per shift, then we know that production is:

technologically inefficient

Production function assumes a given

technology

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.

One of the factors contributing to the fact that labor productivity is higher in the U.S. than in the People's Republic of China is

the higher capital/labor ratio in the U.S.

A firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one unit of labor, but does not want its output quantity to change, the firm should

use 0.8 fewer units of capital

The MRTS for isoquants in a fixed-proportion production function is:

zero or undefined