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 […]
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 […]
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
Which of the following inputs is easier to increase in the short run? A) number of airplanes B) size of the airport terminal C) ticket-counter sales people D) number of luggage carousels ANSWER C
The length of the short run is the same for all firms. Indicate whether the statement is true or false ANSWER False. Firms differ in their ability to change the amount of capital they employ. Therefore, the short-run period is likely different for firms in different industries.
The slope of the total product curve always equals A) the ratio of the marginal product and the average product. B) the change in input divided by the change in output. C) the average product of the input. D) the marginal product of the input. ANSWER D
Total Product is A) the change in total product resulting from an extra unit of labor, holding other factors constant. B) the ratio of output to the number of workers used to produce that output. C) the amount of output that can be produced by a given amount of labor. D) equal to the marginal […]
The Marginal Product of Labor is A) the change in total product resulting from an extra unit of labor, holding other factors constant. B) the ratio of output to the number of workers used to produce that output. C) the amount of output that can be produced by a given amount of labor. D) equal […]
Which of the following statements best describes a production function? A) the maximum profit generated from given levels of inputs B) the maximum level of output generated from given levels of inputs C) all levels of output that can be generated from given levels of inputs D) all levels of inputs that could produce a […]
Explain why labor might not always be a variable input. What will be an ideal response? ANSWER In the real world, units of labor are not identical. Many firms employ highly specialized units of labor. Their supply might be very inelastic so that the firm cannot easily increase the amount of this type of […]
