With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that A) capital and labor are perfect substitutes. B) capital and labor must be used together in a certain proportion. C) capital is not productive. D) labor is not productive. ANSWER C
Date: September 9th, 2020
How much labor does a firm require to produce q = 1000 when capital is fixed at 5 and they have a production function equal to q = 200L0.5K0.5? A) L = 5 B) L = 2.5 C) L = 200 D) L = 2.25 ANSWER A
Date: September 9th, 2020
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
Suppose the production of paved roadways can be represented as q = L0.5 + K0.5. Which of the following statements is (are) TRUE? A) Labor is subject to diminishing marginal productivity in the short run. B) Labor and capital are imperfect substitutes. C) The isoquants for paved roadways are convex. D) All of the above. […]
Date: September 9th, 2020
A typical professional National Football League team has three quarterbacks on its roster. What is one reason why they might not have a fourth quarterback? A) The fourth quarterback’s marginal product is approximately zero. B) The fourth quarterback’s marginal product is approximately ten. C) The fourth quarterback’s marginal product is less than the first quarterback’s […]
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
