Question 1

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. When K = 1 and q = 2, what is the slope of the isoquant? If there is insufficient information to answer the question, describe what information is needed.

Accepted Answer

Since the slope of the isoquant is -K/3L, one needs to know the level of L. Since K = 1 and q = 2, L must equal 16. Thus, the slope of the isoquant at this point is -(1/48).

Question 2

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Accepted Answer

In the short run, MPL = 0.25 ∗...

Question 3

Since 1999, the number of small state-owned enterprises (SOEs) in China has

Accepted Answer

A)  decreased, but the large SOEs continue to hold a large proportion of industrialized assets.
B)  increased, but large SOEs has decreased.
C)  decreased along with the large SOEs.
D)  remained unchanged.E) None of the above
F) B) and C)

Question 4

In the Primary Metals industry, it is estimated that the elasticity of output with respect to labor is 0.51 and the elasticity of output with respect to capital is 0.73. These two measures indicate that the primary metals industry is characterized by

Accepted Answer

A)  decreasing returns to scale.
B)  constant returns to scale.
C)  increasing returns to scale.
D)  no returns to scale.E) A) and D)
F) A) and B)

Question 5

The Average Product of Labor is

Accepted Answer

A)  the change in total product resulting from an extra unit of labor, holding other factors constant.
B)  the ratio of output to the number of workers used to produce that output.
C)  the amount of output that can be produced by a given amount of labor.
D)  equal to the marginal product of labor when the average product is increasing.E) B) and C)
F) A) and B)

Question 6

-The above figure shows the isoquants for producing steel. Increasing returns to scale are

Accepted Answer

A)  present when producing less than 10,000 tons.
B)  present when producing less than 20,000 tons.
C)  present when producing less than 30,000 tons.
D)  never present.E) A) and B)
F) None of the above

Question 7

Technological efficiency is

Accepted Answer

A)  a necessary and sufficient condition for profit maximization.
B)  a sufficient but not necessary condition for profit maximization.
C)  a necessary but not sufficient condition for profit maximization.
D)  a theoretical construct with little connection to the real world.E) A) and B)
F) C) and D)

Question 8

Explain how firms that each produce as efficiently as they can may not be equally productive.

Accepted Answer

Firm-specific characteristics ...

Question 9

Let the production function be q = ALaKb. The function exhibits increasing returns to scale if

Accepted Answer

A)  a + b = 1.
B)  a + b > 1.
C)  a + b 
D)  Cannot be determined with the information given.E) B) and C)
F) A) and C)

Question 10

In the food and kindred products industry, it is estimated that the elasticity of output with respect to labor is 0.43 and the elasticity of output with respect to capital is 0.48. These two measures indicate that the primary metals industry is characterized by

Accepted Answer

A)  decreasing returns to scale.
B)  constant returns to scale.
C)  increasing returns to scale.
D)  no returns to scale.E) None of the above
F) All of the above

Question 11

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons there are

Accepted Answer

A)  increasing returns to scale.
B)  decreasing returns to scale.
C)  constant returns to scale.
D)  diseconomies of scale.E) A) and B)
F) B) and C)

Question 12

-The above figure shows the isoquants for producing steel. Decreasing returns to scale are

Accepted Answer

A)  present when producing more than 10,000 tons.
B)  present when producing more than 20,000 tons.
C)  present when producing more than 30,000 tons.
D)  never present.E) None of the above
F) C) and D)

Question 13

One way to explain the convexity of isoquants is to say that

Accepted Answer

A)  as labor increases and capital decreases, MPL rises while MPK falls.
B)  as labor increases and capital decreases, MPL falls while MPK rises.
C)  as labor increases and capital decreases, MPL and MPK both fall.
D)  as labor increases and capital decreases, MPL and MPK both rise.E) B) and C)
F) All of the above

Question 14

-The above figure shows the short-run production function for Albert's Pretzels. Suppose the marginal productivity of labor for the sixth worker is 1. What is the total output produced by six workers?

Accepted Answer

A)  29
B)  30
C)  31
D)  Not known from the information provided.E) B) and C)
F) A) and B)

Question 15

The slope of an isoquant tells us

Accepted Answer

A)  how much output increases when both inputs are increased.
B)  the increase in MPL when capital increases.
C)  the decrease in capital necessary to keep output constant when labor increases by one unit.
D)  the decrease in capital necessary to keep MPL constant when labor increases by one unit.E) None of the above
F) All of the above

Question 16

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Accepted Answer

The production function below illustrates this point. Diminishing marginal productivity describes what happens to output when only labor increases; returns to scale describes what happens to output when both capital and labor increase.  The first three rows illustrate diminishing marginal returns. Comparing rows 1 and 4 shows increasing returns to scale.

Question 17

Lectures in microeconomics can be delivered either by an instructor (labor) or a movie (capital) or any combination of both. Each minute of the instructor's time delivers the same amount of information as a minute of the movie. Which graph in the above figure best represents the isoquants for lectures in microeconomics when capital per day is on the vertical axis and labor per day is on the horizontal axis?

Accepted Answer

A)  Graph A
B)  Graph B
C)  Graph C
D)  Graph DE) C) and D)
F) A) and B)

Question 18

Skateboards are produced according to the production function, q = 10K0.25L0.5 - L. At what quantity of labor does total product begin to decline given that capital is fixed at 16 units in the short-run?

Accepted Answer

A)  L = 100
B)  L = 10
C)  L = 5
D)  Not enough information is given.E) A) and B)
F) A) and C) A

Question 19

Which of the following statements best summarizes the law of diminishing marginal returns?

Accepted Answer

A)  In the short run, as more labor is hired, output diminishes.
B)  In the short run, as more labor is hired, output increases at a diminishing rate.
C)  In the short run, the amount of labor a firm will hire diminishes as output increases.
D)  As more labor is hired, the length of time that defines the short run diminishes.E) A) and B)
F) A) and C)

Question 20

Non-neutral technological change is more valuable to labor than neutral technological change.

Accepted Answer

A) True 
 B)False

Exam 6: Firms and Production

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. When K = 1 and q = 2, what is the slope of the isoquant? If there is insufficient information to answer the question, describe what information is needed.

Correct Answer
verified
Since the slope of the isoquant is -K/3L, one needs to know the level of L. Since K = 1 and q = 2, L must equal 16. Thus, the slope of the isoquant at this point is -(1/48).

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. Show that the marginal productivity of labor diminishes in the short run.

Correct Answer
verified
In the short run, MPL = 0.25 ∗...
View Answer

Since 1999, the number of small state-owned enterprises (SOEs) in China has

Correct Answer
verified

In the Primary Metals industry, it is estimated that the elasticity of output with respect to labor is 0.51 and the elasticity of output with respect to capital is 0.73. These two measures indicate that the primary metals industry is characterized by

Correct Answer
verified

The Average Product of Labor is

Correct Answer
verified

-The above figure shows the isoquants for producing steel. Increasing returns to scale are

Correct Answer
verified

Technological efficiency is

Correct Answer
verified

Explain how firms that each produce as efficiently as they can may not be equally productive.

Correct Answer
verified
Firm-specific characteristics ...
View Answer

Let the production function be q = AL^aK^b. The function exhibits increasing returns to scale if

Correct Answer
verified

In the food and kindred products industry, it is estimated that the elasticity of output with respect to labor is 0.43 and the elasticity of output with respect to capital is 0.48. These two measures indicate that the primary metals industry is characterized by

Correct Answer
verified

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons there are

Correct Answer
verified

-The above figure shows the isoquants for producing steel. Decreasing returns to scale are

Correct Answer
verified

One way to explain the convexity of isoquants is to say that

Correct Answer
verified

-The above figure shows the short-run production function for Albert's Pretzels. Suppose the marginal productivity of labor for the sixth worker is 1. What is the total output produced by six workers?

Correct Answer
verified

The slope of an isoquant tells us

Correct Answer
verified

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Correct Answer
verified

Skateboards are produced according to the production function, q = 10K^0.25L^0.5 - L. At what quantity of labor does total product begin to decline given that capital is fixed at 16 units in the short-run?

Correct Answer
verified
A

Which of the following statements best summarizes the law of diminishing marginal returns?

Correct Answer
verified

Non-neutral technological change is more valuable to labor than neutral technological change.

Correct Answer
verified

Exam 6: Firms and Production

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. When K = 1 and q = 2, what is the slope of the isoquant? If there is insufficient information to answer the question, describe what information is needed.

Correct AnswerverifiedSince the slope of the isoquant is -K/3L, one needs to know the level of L. Since K = 1 and q = 2, L must equal 16. Thus, the slope of the isoquant at this point is -(1/48).

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Correct AnswerverifiedIn the short run, MPL = 0.25 ∗...View AnswerShow Answer

Since 1999, the number of small state-owned enterprises (SOEs) in China has

Correct AnswerverifiedShow Answer

In the Primary Metals industry, it is estimated that the elasticity of output with respect to labor is 0.51 and the elasticity of output with respect to capital is 0.73. These two measures indicate that the primary metals industry is characterized by

Correct AnswerverifiedShow Answer

The Average Product of Labor is

Correct AnswerverifiedShow Answer

-The above figure shows the isoquants for producing steel. Increasing returns to scale are

Correct AnswerverifiedShow Answer

Technological efficiency is

Correct AnswerverifiedShow Answer

Explain how firms that each produce as efficiently as they can may not be equally productive.

Correct AnswerverifiedFirm-specific characteristics ...View AnswerShow Answer

Let the production function be q = ALaKb. The function exhibits increasing returns to scale if

Correct AnswerverifiedShow Answer

In the food and kindred products industry, it is estimated that the elasticity of output with respect to labor is 0.43 and the elasticity of output with respect to capital is 0.48. These two measures indicate that the primary metals industry is characterized by

Correct AnswerverifiedShow Answer

-The above figure shows the isoquants for producing steel. When producing less than 10,000 tons there are

Correct AnswerverifiedShow Answer

-The above figure shows the isoquants for producing steel. Decreasing returns to scale are

Correct AnswerverifiedShow Answer

One way to explain the convexity of isoquants is to say that

Correct AnswerverifiedShow Answer

-The above figure shows the short-run production function for Albert's Pretzels. Suppose the marginal productivity of labor for the sixth worker is 1. What is the total output produced by six workers?

Correct AnswerverifiedShow Answer

The slope of an isoquant tells us

Correct AnswerverifiedShow Answer

Show that increasing returns to scale can co-exist with diminishing marginal productivity.

Correct AnswerverifiedShow Answer

Skateboards are produced according to the production function, q = 10K0.25L0.5 - L. At what quantity of labor does total product begin to decline given that capital is fixed at 16 units in the short-run?

Correct AnswerverifiedA

Which of the following statements best summarizes the law of diminishing marginal returns?

Correct AnswerverifiedShow Answer

Non-neutral technological change is more valuable to labor than neutral technological change.

Correct AnswerverifiedShow Answer

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. When K = 1 and q = 2, what is the slope of the isoquant? If there is insufficient information to answer the question, describe what information is needed.

Correct Answer
verified
Since the slope of the isoquant is -K/3L, one needs to know the level of L. Since K = 1 and q = 2, L must equal 16. Thus, the slope of the isoquant at this point is -(1/48).

Suppose the production function for T-shirts can be represented as q = L^0.25K^0.75. Show that the marginal productivity of labor diminishes in the short run.

Correct Answer
verified
In the short run, MPL = 0.25 ∗...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Firm-specific characteristics ...
View Answer

Let the production function be q = AL^aK^b. The function exhibits increasing returns to scale if

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Skateboards are produced according to the production function, q = 10K^0.25L^0.5 - L. At what quantity of labor does total product begin to decline given that capital is fixed at 16 units in the short-run?

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
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