When the isocost line is tangent to the isoquant, then A) MRTS = -w/r. B) the firm is producing that level of output at minimum cost. C) the last dollar spent on capital yields as much extra output as the last dollar spent on labor. D) All of the above. ANSWER D
Date: September 9th, 2020
Economic growth can be depicted as a A) shift in the contract curve. B) a change in the dimensions of the Edgeworth box. C) a change in the preference curves of individuals. D) a change in the number of people in the Edgeworth box. ANSWER B
Date: September 9th, 2020
A two-good economy is in a competitive equilibrium. The price of a piece of candy is $2 and the price of a desk is $12. The marginal cost of candy is given by MCc = 2Qc and the marginal cost of a desk is MCd = 4 + 4Qd. The current production level of candy […]
Date: September 9th, 2020
If an isocost line crosses the isoquant twice, a cost minimizing firm will A) use a different isocost line to select the bundle of inputs. B) use the input bundle associated with the intersection on the higher point of the isoquant. C) use the input bundle associated with the intersection on the lower point of […]
Date: September 9th, 2020
Economic growth can be obtained A) by government legislation. B) by a change in the level of inputs or an improvement in technology. C) only through a change in the level of inputs, hence the desire for conquest throughout the history of the world. D) only through a change in technology, which explains the explosive […]
Date: September 9th, 2020
In a perfectly competitive equilibrium with production and trade, which of the following results occur(s)? A) Pareto-efficiency is obtained. B) The First Welfare Theorem is satisfied. C) There is efficiency in production. D) All of the above. ANSWER D
Date: September 9th, 2020
A firm can minimize cost by A) picking the bundle of inputs where the lowest isocost line touches the isoquant. B) picking the bundle of inputs where the isoquant is tangent to the isocost line. C) picking the bundle of inputs where the last dollar spent on one input gives as much extra output as […]
Date: September 9th, 2020
Competition results in the efficient product mix because A) producers are setting MRT equal to minus the price ratio while consumers are setting MRS equal to minus the price ratio ensuring that MRT will equal MRS. B) consumers are on the contract curve. C) the slope of the production possibility frontier will equal the slope […]
Date: September 9th, 2020
The slope of the isoquant tells the firm how much A) output increases when labor increases by one unit. B) output increases when capital and labor are doubled. C) capital must decrease to keep output constant when labor increases by one unit. D) a unit of capital costs relative to the cost of labor. […]
Date: September 9th, 2020
If the cost of labor increases, the isocost line will A) stay the same. B) shift outward in parallel fashion. C) rotate inward around the point where only capital is employed in production. D) shift inward in parallel fashion. ANSWER C
Date: September 9th, 2020
