Questions:
Question 1
The marginal product of labor can be illustrated geometrically as the:
A. slope of the total product curve with respect to labor
B. slope of the total product curve with respect to capital
C. slope of a chord from the origin out to the total product curve at the specified level of labor
D. inverse of the slope of a chord from the origin out to the total product curve at the specified level of labor
E. slope of the total product curve with respect to labor divided by the slope of the total product curve with respect to capital
Question 2
In the table below, the marginal product of labor at L = 6 is:
A. 3
B. 2
C. 5
D. 4
E. 1
Question 3
Output is produced according to Q = 4LK, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then the cost minimizing combination of K and L capable of producing 32 units of output is:
A. L = 8 and K = 1
B. L = 4 and K = 2
C. L = 2 and K = 2
D. L = 2 and K = 4
E. L = 1 and K = 8
Question 4
If output is produced according to Q = 3K + 4L, then this production process exhibits:
A. increasing returns to scale
B. decreasing returns to scale
C. first increasing and then decreasing returns to scale
D. constant returns to scale
E. first decreasing and then increasing returns to scale
Question 5
Hedge Fun is a landscaping firm that specializes in topiary. Last year, the firm had 30 employees and served 120 customers. This year, it had 35 employees and served 135 customers. What is the marginal product of labor?
A. 2
B. 3
C. 4
D. 5
E. none of the above
Question 6
Whenever average product is declining with increases in input usage:
A. marginal product is less than average product
B. total product is declining with increases in input
C. total product is increasing with increases in input
D. marginal product is greater than average product
E. total product is at a maximum
Question 7
The law of diminishing marginal returns states that:
A. the marginal product of labor declines as all inputs are increased
B. production functions exhibit decreasing returns to scale
C. the marginal product of labor returns as more capital is used
D. the marginal product of a factor eventually diminishes as more of the input is used, holding other inputs fixed
E. the marginal product of a factor always diminishes as more of the input is used, holding other inputs fixed
Question 8
The optimal combination of two inputs, K and L, can be characterized by:
A. PKMPK = PLMPL
B. MPK = MPL
C. PLMPK = PKMPL
D. MPK/MPL = PL/PK
E. none of the above
Question 9
The marginal rate of technical substitution between two inputs:
A. shows the rate at which one input can be traded for another, holding output constant
B. shows the efficient combination of inputs
C. increases as we move down an isoquant
D. shows the rate at which output can be increased by using more of both inputs
E. shows the rate at which output decreases when using less of one of the inputs
Question 10
If output is produced according to Q = (KL)3/4, then this production process exhibits:
A. increasing returns to scale
B. decreasing returns to scale
C. first increasing and then decreasing returns to scale
D. constant returns to scale
E. first decreasing and then increasing returns to scale
Question 11
Output elasticity can be defined as the:
A. percentage change in output divided by the (equal) percentage change in all inputs
B. change in output divided by the change in all inputs
C. change in inputs divided by the change in output
D. change in output divided by the change in one input
E. percentage change in output divided by the (average) percentage change in all inputs
Question 12
If output is produced according to Q = 30L + 12K, then the output elasticity is:
A. 2
B. 0
C. 1
D. 0.5
E. 21