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
A firm operating with diminishing total returns cannot be profit maximizing. Indicate whether the statement is true or false ANSWER True . This firm could produce more output with fewer inputs. This cannot be profit maximizing.
Date: September 9th, 2020
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 […]
Date: September 9th, 2020
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 […]
Date: September 9th, 2020
Which of the following statements best summarizes the law of diminishing marginal returns? A) In the short run, as more labor is hired, output diminishes. B) In the short run, as more labor is hired, output increases at a diminishing rate. C) In the short run, the amount of labor a firm will hire diminishes […]
Date: September 9th, 2020
In the long run, all factors of production are A) variable. B) fixed. C) materials. D) rented. ANSWER A
Date: September 9th, 2020
A production function tells the firm A) the maximum it can expect to produce with a given mix of inputs. B) the average it can expect to produce with a given mix of inputs. C) the minimum it can expect to produce with a given mix of inputs. D) the average level of production for […]
Date: September 9th, 2020
If the marginal productivity of labor is constant for all levels of output, then the average productivity of labor A) is constant. B) equals the marginal productivity of labor. C) Both A and B above. D) Either A or B above but not both. ANSWER C
Date: September 9th, 2020
Which of the following is least likely to be considered a capital input? A) a sewing machine B) a tractor C) a telephone D) a ten dollar bill ANSWER D
Date: September 9th, 2020
