Question 1

Use the following table to answer the questions :
Table 7-4 shows the shows the quantities of labor and capital required to produce various levels of output.

-Refer to Table 7-4.When the firm expands from 6 units of capital and 2 units of labor
To 12 units of capital and 4 units of labor,the production function exhibits:

Accepted Answer

A)  increasing returns to scale.
B)  constant returns to scale.
C)  decreasing returns to scale.
D)  diminishing marginal returns.E) A) and B)
F) B) and D)

Question 2

Draw isoquants for the following:
a)Tree Fellas Ltd.is a logging firm where the labor input is loggers and capital refers to chainsaws.The output produced is measured in terms of number of trees felled.One logger uses one chainsaw;a logger without a chainsaw will not contribute to output and neither will a chainsaw without a logger.
b)Porch & Co.is a newspaper distributing agency that has to deliver a total of 1,000 newspapers a week using two inputs: paperboys (labor)and newspaper vending machines (capital).If the firm hires an extra vending machine,it can replace one paperboy and still deliver the same number of newspapers.

Accepted Answer

a)The inputs used in the felling of tree...

Question 3

The long-run refers to:

Accepted Answer

A)  a time period of one year or more.
B)  the time period in which all inputs are variable.
C)  the time period in which it is too costly to change the usage of at least one input.
D)  a time period when marginal returns are diminishing.E) None of the above
F) B) and C)

Question 4

Table 7-2 shows the combinations of labor and capital that are used to produce various levels of output 
Refer to Table 7-2.Based on the input-usage ratio,we can say that the firm is operating _____.

Accepted Answer

A)  at an economic loss
B)  in the short-run
C)  in a constant-cost industry
D)  in the long-runE) All of the above
F) A) and B)

Question 5

The slope of the total product curve measures the _____ of the input.

Accepted Answer

A)  marginal product
B)  average product
C)  total product
D)  costE) None of the above
F) A) and B)

Question 6

The ratio of the change in total product to the change in total quantity of the input being used is _____.

Accepted Answer

A)  equal to marginal product
B)  constant as employment levels of the input vary
C)  equal to average product
D)  equal to the marginal rate of technical substitutionE) B) and D)
F) B) and C)

Question 7

According to the law of diminishing marginal returns:

Accepted Answer

A)  when the amount of some input is increased by equal increments,holding other inputs constant,the resulting increments in output will be negative.
B)  when all inputs are increased proportionately,output eventually will decrease at a smaller rate.
C)  when the amount of some input is increased at equal increments,holding other inputs constant,the resulting increments in output will eventually decrease.
D)  firms will not operate on the portion of the total product curve where marginal product is declining.E) B) and D)
F) B) and C)

Question 8

What factors give rise to increasing returns to scale and decreasing returns to scale?

Accepted Answer

First,when a firm is producing a large q...

Question 9

Use the following figure to answer the questions :
Figure 7-2 shows the total product curve for different levels of a variable input,labor. 
-In Figure 7-2,marginal product reaches a maximum at point _____.

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) B) and C)
F) None of the above

Question 10

A technologically efficient level of output is the _____.

Accepted Answer

A)  maximum output possible from the least amount of inputs
B)  level of output produced using the latest technology available
C)  cost-minimizing level of output
D)  maximum output available from a given set of inputsE) A) and D)
F) B) and C)

Question 11

If the average product of labor is 150 bushels of wheat when three workers farm an acre of land and the marginal product of the fourth worker is 75 bushels,then the total output with four workers is _____ bushels.

Accepted Answer

A)  225
B)  50
C)  525
D)  675E) A) and B)
F) A) and C)

Question 12

Use the following figure to answer the questions : Figure 7-1 shows the total product curve for different levels of a variable input,labor.

-Refer to Figure 7-1.A firm would choose to operate between points C and D because:

Accepted Answer

A)  marginal product has already reached a maximum.
B)  average product is rising over that range.
C)  marginal product and average product are positive,but falling.
D)  marginal product and average product are rising.E) A) and C)
F) None of the above

Question 13

In the long run,_____.

Accepted Answer

A)  the marginal cost of each input differs by the ratio of their prices
B)  all inputs to production are fixed
C)  the marginal cost of each input equals the ratio of their prices
D)  all inputs to production are variableE) B) and D)
F) A) and C)

Question 14

When the marginal and average products of labor are equal:

Accepted Answer

A)  marginal product must be at its maximum.
B)  marginal product must be at a minimum.
C)  average product must be at its maximum.
D)  average product must be increasing.E) A) and B)
F) A) and C)

Question 15

The fact that limited use of caffeine can improve mental alertness and help performance,while excessive use of caffeine can cause anxiety and trembling shows _____.

Accepted Answer

A)  that coffee is an inferior good
B)  the law of diminishing marginal returns with respect to test performance
C)  the law of returns to scale with respect to test performance
D)  decreasing returns to scale in coffee productionE) None of the above
F) C) and D)

Question 16

Which of the following statements is true of the relationship between marginal product and average product of labor?

Accepted Answer

A)  When the marginal product of labor is decreasing,the average product of labor must also be decreasing.
B)  When the average product of labor is increasing,the marginal product of labor must also be increasing.
C)  When the marginal and average products of labor are equal,the marginal product is at its minimum.
D)  When the average product of labor is decreasing,average product must be greater than marginal product.E) None of the above
F) A) and B)

Question 17

The law of diminishing marginal returns _____.

Accepted Answer

A)  is relevant in the short run.
B)  assumes all the inputs are fixed
C)  is applicable to fixed and variable inputs
D)  applies when all inputs are increasedE) A) and B)
F) B) and D)

Question 18

A carpenter hammers nails each day at work.The average number of nails hammered over the first three hours is 50,and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.The total output after five hours work is _____ nails.

Accepted Answer

A)  150
B)  110
C)  210
D)  60E) A) and B)
F) B) and C)

Question 19

Estimation of a production function from the linear equation Q = a + bL + cK,assumes that the law of diminishing returns _____.

Accepted Answer

A)  applies to labor only
B)  applies to capital only
C)  applies to both capital and labor
D)  does not apply to either inputE) A) and B)
F) B) and D)

Question 20

An isoquant shows _____.

Accepted Answer

A)  the different quantities of output that can be produced with different quantities of inputs
B)  the combination of inputs that can be used to produce a fixed quantity of output
C)  the different quantities of output that can be produce with fixed quantities of inputs
D)  the combination of inputs than can be used to produce different quantities of outputE) A) and D)
F) A) and C)

Exam 7: Production

Estimation of a production function from the linear equation Q = a + bL + cK,assumes that the law of diminishing returns _____.

Correct Answer
verified

Use the following figure to answer the questions : Figure 7-2 shows the total product curve for different levels of a variable input,labor. -In Figure 7-2,marginal product reaches a maximum at point _____.

Correct Answer
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Which of the following statements is true of the relationship between marginal product and average product of labor?

Correct Answer
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When the marginal and average products of labor are equal:

Correct Answer
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Table 7-2 shows the combinations of labor and capital that are used to produce various levels of output Refer to Table 7-2.Based on the input-usage ratio,we can say that the firm is operating _____.

Correct Answer
verified

The fact that limited use of caffeine can improve mental alertness and help performance,while excessive use of caffeine can cause anxiety and trembling shows _____.

Correct Answer
verified

If the average product of labor is 150 bushels of wheat when three workers farm an acre of land and the marginal product of the fourth worker is 75 bushels,then the total output with four workers is _____ bushels.

Correct Answer
verified

The ratio of the change in total product to the change in total quantity of the input being used is _____.

Correct Answer
verified

What factors give rise to increasing returns to scale and decreasing returns to scale?

Correct Answer
verified
First,when a firm is producing a large q...
View Answer

Correct Answer
verified

A technologically efficient level of output is the _____.

Correct Answer
verified

Use the following figure to answer the questions : Figure 7-1 shows the total product curve for different levels of a variable input,labor. -Refer to Figure 7-1.A firm would choose to operate between points C and D because:

Correct Answer
verified

According to the law of diminishing marginal returns:

Correct Answer
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An isoquant shows _____.

Correct Answer
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The law of diminishing marginal returns _____.

Correct Answer
verified

The long-run refers to:

Correct Answer
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In the long run,_____.

Correct Answer
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Correct Answer
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a)The inputs used in the felling of tree...
View Answer

The slope of the total product curve measures the _____ of the input.

Correct Answer
verified

A carpenter hammers nails each day at work.The average number of nails hammered over the first three hours is 50,and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.The total output after five hours work is _____ nails.

Correct Answer
verified

Exam 7: Production

Estimation of a production function from the linear equation Q = a + bL + cK,assumes that the law of diminishing returns _____.

Correct AnswerverifiedShow Answer

Use the following figure to answer the questions : Figure 7-2 shows the total product curve for different levels of a variable input,labor. -In Figure 7-2,marginal product reaches a maximum at point _____.

Correct AnswerverifiedShow Answer

Which of the following statements is true of the relationship between marginal product and average product of labor?

Correct AnswerverifiedShow Answer

When the marginal and average products of labor are equal:

Correct AnswerverifiedShow Answer

Table 7-2 shows the combinations of labor and capital that are used to produce various levels of output Refer to Table 7-2.Based on the input-usage ratio,we can say that the firm is operating _____.

Correct AnswerverifiedShow Answer

The fact that limited use of caffeine can improve mental alertness and help performance,while excessive use of caffeine can cause anxiety and trembling shows _____.

Correct AnswerverifiedShow Answer

If the average product of labor is 150 bushels of wheat when three workers farm an acre of land and the marginal product of the fourth worker is 75 bushels,then the total output with four workers is _____ bushels.

Correct AnswerverifiedShow Answer

The ratio of the change in total product to the change in total quantity of the input being used is _____.

Correct AnswerverifiedShow Answer

What factors give rise to increasing returns to scale and decreasing returns to scale?

Correct AnswerverifiedFirst,when a firm is producing a large q...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A technologically efficient level of output is the _____.

Correct AnswerverifiedShow Answer

Use the following figure to answer the questions : Figure 7-1 shows the total product curve for different levels of a variable input,labor. -Refer to Figure 7-1.A firm would choose to operate between points C and D because:

Correct AnswerverifiedShow Answer

According to the law of diminishing marginal returns:

Correct AnswerverifiedShow Answer

An isoquant shows _____.

Correct AnswerverifiedShow Answer

The law of diminishing marginal returns _____.

Correct AnswerverifiedShow Answer

The long-run refers to:

Correct AnswerverifiedShow Answer

In the long run,_____.

Correct AnswerverifiedShow Answer

Correct Answerverifieda)The inputs used in the felling of tree...View AnswerShow Answer

The slope of the total product curve measures the _____ of the input.

Correct AnswerverifiedShow Answer

A carpenter hammers nails each day at work.The average number of nails hammered over the first three hours is 50,and the marginal product of the fourth and fifth hours of work is 40 and 20 nails,respectively.The total output after five hours work is _____ nails.

Correct AnswerverifiedShow Answer

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First,when a firm is producing a large q...
View Answer

Correct Answer
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a)The inputs used in the felling of tree...
View Answer

Correct Answer
verified

Correct Answer
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