Chapter 8 Homework

Say you own a Mexican place that produces, among other things, Mexican burritos. The marginal product of your last worker was 5. If the marginal rate of technical substitution between capital and labor is 0.5, then marginal product of capital is A. 10 B. 5 C. 1 D. we can't say with the information given

A. 10

In a short-run production function before diminishing returns set in, both MPL and APL will have A. positive slopes and MPL will lie above APL. B. positive slopes and APL will lie above MPL. C. negative slopes and MPL will lie above APL. D. negative slopes and APL will lie above MPL.

A. positive slopes and MPL will lie above APL.

(Appendix) The defining characteristics of increasing returns to scale may be summarized as A.F(cK,cL) > cF(K,L). B. F(cK,cL) = cF(K,L). C. F(cK,cL) < cF(K,L). D. Q = min(aK,aL).

A.F(cK,cL) > cF(K,L).

(Appendix) Which of the following production functions exhibits increasing returns to scale? A. Q = K1/2Ll/2 B. Q = Kl/2L2/3 C. Q = Kl/4Ll/3 D. Q = K/L

B. Q = Kl/2L2/3

Geometrically, the marginal product A. is the slope of the line joining the origin to the corresponding point on the total product curve. B. at any point is the slope of the total product curve at that point. C.is that point at which the total product curve exhibits diminishing returns. D. is the slope of the average product curve.

B. at any point is the slope of the total product curve at that point.

The general rule for allocating a productive resource efficiently across different production activities of the same product, like fishing boats in the text case example, is to choose the allocation for which the A. average product of the resource is the same in every activity. B. marginal product of the resource is the same in every activity. C. total product of the resource is the same in every activity. D. average product is equal to the marginal product in every activity.

B. marginal product of the resource is the same in every activity.

The rate at which one input can be exchanged for another without altering output is called A. the slope of the total product curve. B.the marginal rate of technical substitution. C.the slope of the marginal product of labor. D.the law of diminishing returns of labor.

B. the marginal rate of technical substitution.

(Appendix) Suppose the production function for widgets is Q = (KL)½. If capital is fixed at 4 units, what is the marginal product of labor when you produce 10 units of output? A.0.4 B. 1 C. 1.5 D. 0.2

D. 0.2

In the long run A. all inputs are fixed. B. only capital inputs are fixed. C. all intermediate goods are fixed. D. all inputs are variable.

D. all inputs are variable.

The average product of a variable input A. decreases at an increasing rate. B. constantly rises over the relevant range of production. C. is the change in the total product that occurs when the variable input increases one unit. D. is defined as the total product divided by the quantity of the variable input.

D. is defined as the total product divided by the quantity of the variable input.

A production function for which proportional changes in all inputs leads to a more-than-proportional change in output is said to exhibit A.diminishing returns. B.decreasing returns to scale. C.constant returns to scale. D.Increasing returns to scale.

D.Increasing returns to scale.

If equal amounts of a variable input are sequentially added to the fixed input in a typical production function, A. the increments to output will decrease first and then increase. B. the additions to output will be constant. C. increments to output will increase indefinitely. D.increments to output will first increase at an increasing rate and then at a decreasing rate

D.increments to output will first increase at an increasing rate and then at a decreasing rate