What is the MRTS for a firm with the following production function, q = 10L0.5K0.3? A) MRTS = 5K/3L B) The firm will substitute a constant 3 units of capital for 5 units of labor. C) The MRTS does not exist because labor and capital are perfect complements. D) None of the above. ANSWER […]
Date: September 9th, 2020
How much capital does a firm require to produce q = 3200 when labor is 4 and they have a production function equal to q = 200L0.5K0.5? A) K = 64 B) K = 8 C) K = 16 D) K = 25 ANSWER A
Date: September 9th, 2020
What is the MRTS for a firm with the following production function , q = 200L0.5K0.5 with L = 4 and K = 16? A) MRTS = -4 B) MRTS = -2 C) MRTS = -1 D) MRTS = -8 ANSWER A
Date: September 9th, 2020
Describe the relationship between marginal productivity and average productivity. Use calculus or a graph to support your answer. What will be an ideal response? ANSWER AP = Q(L)/L. dAP/dL = ([L ∗ MP] – Q) /L2 = (MP – AP)/L. Thus, if MP = AP, AP is constant. If MP > AP, AP will […]
Date: September 9th, 2020
For a linear production function, q = f(L,K) = 4L + 2K, what is the short-run production function given that capital is fixed at = 50? A) q = 4L + 100 B) q = 4L + 50 C) q = 4L D) q = 104 ANSWER A
Date: September 9th, 2020
Thomas Malthus’ prediction of mass starvation resulting from diminishing marginal returns has not been fulfilled because A) the law of diminishing marginal returns did not hold in this case. B) Malthus ignored other factors like technological change. C) relative to Malthus’ day, larger percentage of today’s labor works in the agricultural sector. D) All of […]
Date: September 9th, 2020
Skateboards are produced according to the production function, q = 10K0.25L0.5 – L. Given that capital is fixed at 16 units in the short run, what quantity of labor is needed to produce 36 units of output? A) L = 4 B) L = 2 C) L = 25 D) L = 16 ANSWER […]
Date: September 9th, 2020
An isoquant represents levels of capital and labor that A) have constant marginal productivity. B) yield the same level of output. C) incur the same total cost. D) All of the above. ANSWER B
Date: September 9th, 2020
Jennifer is the only employee of her sole proprietorship. She is entertaining the idea of hiring an additional employee. She knows that on her own she can produce 100 units per day. Jennifer figures that Applicant A will help her produce 175 units per day whereas Applicant B will help her produce 155 units per […]
Date: September 9th, 2020
Consider the following short-run production function: q = 5L2 – 1/3 L3. At what level of L do diminishing marginal returns begin? At what level of L do diminishing returns begin? What will be an ideal response? ANSWER MP = 10L – L2. Marginal product peaks when L = 5 and equals zero when […]
Date: September 9th, 2020
