A construction company builds roads with machinery (capital, K) and labor (L). If we plot the isoquants for the production function so that labor is on the horizontal axis, then a point on the isoquant with a small MRTS (in absolute value) is associated with high ________ use and low ________ use. A) labor, capital […]
Ronny’s Pizza House is a profit maximizing firm in a perfectly competitive local restaurant market, and their optimal output is 80 pizzas per day. The local government imposes a new tax of $250 per year on all restaurants that operate in the city. How does this affect Ronny’s profit maximizing decisions? A) No impact on […]
Refer to Scenario 17.3. If there is no insurance and a fire protection program in place, the expected loss from fire for this company is A) $0. B) $300. C) $3,000. D) $6,000. E) $300,000. ANSWER B
Which of the following demand functions represents a price elasticity of demand equal to -0.33 and an income elasticity of demand equal to 0.8 at all points along the curve? A) Q = 3 – 0.33P + 0.8I B) Q = 4.5 – 0.33 log(P) + 0.8I C) log(Q) = 1.34 – 0.33 log(P) + […]
There are more poor whites than poor blacks in the U.S. Indicate whether the statement is true or false ANSWER T
If the isoquants in an isoquant map are downward sloping but bowed away from the origin (i.e., concave to the origin), then the production technology violates the assumption of: A) technical efficiency. B) free disposal. C) diminishing marginal returns. D) positive average product. ANSWER C
The thesis of racial inferiority is rather recent. Indicate whether the statement is true or false ANSWER F
Another commonly used algebraic form for a demand function is the semi-logarithmic functional form, log(Q) = a – bP + cI, where Q is quantity demanded, P is the product price, and I is income. Here, -100b represents the percentage change in quantity demanded given a one unit increase in price. By the Law of […]
A straight-line isoquant A) is impossible. B) would indicate that the firm could switch from one output to another costlessly. C) would indicate that the firm could not switch from one output to another. D) would indicate that capital and labor cannot be substituted for each other in production. E) would indicate that capital and […]
Individual families exhibit remarkable year-to-year stability in income. Indicate whether the statement is true or false ANSWER F
