Econ 308 Chapter 9
7. In a short-run production function before diminishing returns set in, A. Both MPL and APL will have positive slopes and MPL will lie above APL B. Both MPL and APL will have positive slopes and APL will lie above MPL C. Both MPL and APL will have negative slopes and MPL will lie above APL D. Both MPL and APL will have negative slopes and APL will lie above MPL
a
9. When the marginal product curve lies below the average product curve, A. The average product curve must be falling B. The total product curve must be falling C. The average product curve must be rising D. The marginal product curve must be rising
a
The short run is defined as that period of time during which A. One or more inputs cannot be freely varied B. All inputs are variable C. All inputs are fixed D. Labor is counted as a fixed input
a
10. 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
12. A production function for which proportional changes in all inputs leads to a less-thanproportional 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
b
15. On the next exam for this course you can study for a maximum of four hours. If you don't study at all you will get a score of 70. One hour would give you an 80, the second hour increased your score to 89, the third to 92. If you studied the fourth hour your score would be 87. In which hour did diminishing returns set in? A. The first because the score was the lowest of the studying options B. The second because your gain is less than the previous hour C. The third because your score peaked there D. The fourth because you had a drop in points in this hour
b
17. Suppose that at a firm's current level of production the marginal product of capital is equal to 10 units, while the marginal rate of technical substitution between capital and labor is 2. Given this, we know the marginal product of labor must be: A. 5 B. 20 C. 10 D. It is not possible to say with the information given in the problem
b
18. In the production of bicycles an increase of 2 percent in the level of capital and labor respectively will generate an increase of 1 percent in the production of bicycles. From this information we know that the production of bicycles exhibits: A. Diminishing marginal returns B. Decreasing returns to scale C. Increasing returns to scale D. Constant returns to scale
b
4. The law of diminishing returns to an input says that if other inputs are fixed A. output eventually will decrease with increases of the variable input B. change in output will eventually decrease with increases in the variable input C. revenue will eventually decrease with increases in the variable input. D. the variable input will eventually decrease with more output
b
6. 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
8. Say you are the owner of a Pizza place. You know that when your produce 10 pizzas, the average product of each of your workers is 10, and the marginal product of your last worker is 15. From this information you know that: A. the marginal product is increasing B. the average product is increasing C. the average product is decreasing D. the marginal product is decreasing
b
11. Say you own a Mexican place that produces, among other things, Mexican burritos. Your production of burritos is given by the equation Q = 5K1/2L1/2, where Q is the amount of burritos, K is the amount of capital and L is the amount of labor. How many workers you would need to use in order to minimize the cost of producing 100 burritos when the capital is, K, is 100? A. 1 B. 2 C. 4 D. 0
c
14. Returns to scale refers to A. What happens to output when at least one input is fixed and one is varied B. What happens to output when all inputs are held fixed C. What happens to output when all inputs are varied in some proportion D. The law of diminishing returns
c
16. (Appendix) Which of the following production functions exhibits decreasing returns to scale? A. Q = K1/2Ll/2 B. Q = Kl/2L2/3 C. Q = Kl/4Ll/3 D. Q = K/L
c
13. For any constant returns production function, the isoquants for Q = 1, Q = 2, Q = 3, etc. will A. All be inversely proportional to the inputs B. Exhibit diminishing returns in the long run C. Be straight lines D. Be equally spaced, in that the distance between Q = 1 and Q = 2 is the same as Q = 2 a
d
3. 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
5. 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
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