question
f production is given by
Q =KL, doubling both inputs
Q =KL, doubling both inputs
answer
more than doubles output.
question
If Q = K1/2L1/2 the MPL is
answer
diminishing
question
If Q = K1/2L1/2 the MPK is
answer
diminishing
question
A production function measures how
answer
a firm transforms inputs into output.
question
The marginal physical product of labor is defined as
answer
the extra output produced by employing one more unit of labor while holding other inputs
constant.
constant.
question
If more and more labor is employed while keeping all other inputs constant, the marginal physical productivity of labor
answer
will eventually decrease.
question
The marginal physical product of labor is
answer
the slope of the total output curve at the relevant point.
question
The average productivity of capital is defined as
answer
the ratio of total output produced to the quantity of capital employed.
question
Graphically, the average productivity of labor would be illustrated by
answer
the slope of the chord connecting the origin with the relevant point on the total output curve.
question
A firm's isoquant shows
answer
the various combinations of capital and labor that will produce a given amount of output.
question
The marginal rate of technical substitution of labor for capital measures
answer
the amount by which capital input can be reduced while holding quantity produced constant
when one more unit of labor is used.
when one more unit of labor is used.
question
firm's rate of technical substitution is represented graphically by
answer
the negative of the slope of the isoquant at the relevant point.
question
For a fixed proportion production function, at the vertex of any of the (L-shaped) isoquants the marginal productivity of either input is
answer
zero
question
If, as a result of doubling all its inputs, a firm can more than double its output, the firm's production function exhibits
answer
increasing returns to scale.
question
The production function q=square root of KL
answer
exhibits constant returns to scale and diminishing marginal productivities for K and L.
question
A fixed-proportion production function has isoquants that are
answer
L-shaped.
question
A technical innovation in the production of automobiles by Ford Motor Company's for 1 million cars per year would necessarily
answer
shift the "1 million car" isoquant toward the origin
question
Suppose MPL= 20 and MPK= 40 and the rental rate on capital is $10. If the level of production is currently efficient the wage rate must be
answer
$5
question
A linear total cost curve which passes through the origin implies that
answer
average and marginal costs are constant and equal.
question
The curve in the diagram is called
answer
the expansion path.
question
Suppose that the price of labor (PL) is $10 and the price of capital (PK) is $20. What is the equation of the isocost line corresponding to a total cost of $100?
answer
100 = 10L + 20K
question
A price taker is:
answer
both a perfectly competitive firm and a firm that cannot influence the market price
question
If demand is inelastic, marginal revenue will be
answer
negetive
question
Bette's Breakfast, a perfectly competitive eatery, sells its "Breakfast Special" (the only item on the menu) for $4.00 The costs of waiters, cooks, power, food etc. average out to $3.95 per meal; the costs of the lease, insurance, and other such expenses average out to $1.25 per meal. Bette should:
answer
continue producing in the short run, but plan to go out of business in the long run.
question
The perfectly competitive firm's marginal revenue curve
is:
is:
answer
horizontal.
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