Question 1

Graphically,the average productivity of labor is illustrated by&#10;A)the slope of the total product curve at the relevant point.&#10;B)the slope of the marginal productivity curve at the relevant point.&#10;C)the negative of the slope of the marginal productivity curve at the relevant point.&#10;D)the slope of the chord connecting the origin with the relevant point on the total output curve.

Accepted Answer

The average productivity of labor is illustrated graphically by the slope of the chord connecting the origin with the relevant point on the total output curve. This slope represents the average output per unit of labor input.

Question 2

A firm's isoquant shows&#10;A)the amount of labor needed to produce a given level of output with capital held constant.&#10;B)the amount of capital needed to produce a given level of output with labor held constant.&#10;C)the various combinations of capital and labor that will produce a given amount of output.&#10;D)none of these answers is correct.

Accepted Answer

An isoquant represents the combinations of inputs (usually capital and labor) that can be used to produce a given level of output. Therefore, option C is the correct answer. Option A is incorrect because isoquants hold capital constant and vary labor; option B is incorrect because isoquants hold labor constant and vary capital. Option D is incorrect because one of the answers is correct.

Question 3

The marginal physical productivity of labor is defined as&#10;A)a firm's total output divided by total labor input.&#10;B)the extra output produced by employing one more unit of labor while allowing other inputs to vary.&#10;C)the extra output produced by employing one more unit of labor while holding other inputs constant.&#10;D)the extra output produced by employing one more unit of capital while holding labor input constant.

Accepted Answer

The marginal physical productivity of labor is the additional output that results from adding one more unit of labor to the production process while holding all other inputs constant. Therefore, choice C accurately defines the concept.

Question 4

Suppose the production function for good q is given by where k and l are capital and labor inputs.Consider three statements about this function: I.The function exhibits constant returns to scale.
II)The function exhibits diminishing marginal productivities to all inputs.
III)The function has a constant rate of technical substitution.
Which of these statements is true?

A)All of them.
B)None of them.
C)I and II but not III.
D)I and III but not II.
E)only I.

Accepted Answer

The function exhibits constant returns to scale (doubling inputs doubles output) and has a constant rate of technical substitution (linear function), but does not exhibit diminishing marginal productivities (marginal products are constant).

Question 5

The production function  &#10;A)exhibits constant returns to scale and constant marginal productivities for k and l.&#10;B)exhibits diminishing returns to scale and diminishing marginal productivities for k and l.&#10;C)exhibits constant returns to scale and diminishing marginal productivities for k and l.&#10;D)exhibits diminishing returns to scale and constant marginal productivities for k and l.

Accepted Answer

A production function exhibits constant returns to scale if doubling the inputs doubles the output, and it exhibits diminishing returns to scale if doubling the inputs results in less than twice the output. The production function given doesn't have any exponent on k or l, which suggests that it exhibits constant returns to scale. 
The marginal productivities of k and l are the partial derivatives of the production function with respect to k and l, respectively. The production function given has linear terms in k and l, which means that the marginal productivities of k and l are constants. However, since the production function doesn't have any exponent on kk or ll, it suggests that the marginal productivities of k and l are decreasing with each additional unit of k or l. Therefore, the production function exhibits constant returns to scale and diminishing marginal productivities for k and l.

Question 6

If more and more labor is employed while keeping all other inputs constant,the marginal physical productivity of labor will eventually&#10;A)increase.&#10;B)decrease.&#10;C)remain constant.&#10;D)We cannot tell from the information provided.

Accepted Answer

The law of diminishing marginal returns suggests that as more units of a variable input (labor) are added to the production process while holding all other inputs constant, the marginal physical productivity of that input will eventually decrease. This occurs due to limited resources and the fact that each additional unit of labor will have a smaller impact on overall production as the other inputs remain constant. Therefore, the correct answer is B - decrease.

Question 7

A production function may exhibit&#10;A)constant returns to scale and diminishing marginal productivities to all inputs.&#10;B)constant returns to scale and diminishing marginal productivities to all but one input,but at least one input must have a constant marginal productivity.&#10;C)constant returns to scale and diminishing marginal productivity to at most one input.&#10;D)constant returns to scale and diminishing marginal productivities for no inputs.

Accepted Answer

A production function can exhibit constant returns to scale, meaning that if all inputs are increased by a certain percentage, output increases by the same percentage, while also having diminishing marginal productivities for all inputs, which means that adding an additional unit of any input will result in a smaller increase in output.

Question 8

The average productivity of labor reaches its maximum&#10;A)at the point of inflection of the total product curve.&#10;B)where the slope of the total product curve is steepest.&#10;C)where the slope of the total product curve is zero.&#10;D)where marginal and average productivity are equal.

Accepted Answer

At the point where marginal and average productivity are equal, average productivity reaches its maximum. This is because marginal productivity captures the additional output produced by adding one more unit of labor, while average productivity measures the total output per unit of labor. When marginal productivity is equal to average productivity, it means that adding one more unit of labor would not increase the average output. Therefore, the average productivity is maximized at this point.

Question 9

For a fixed proportion production function,at the vertex of any of the (L?shaped)isoquants the marginal productivity of either input is&#10;A)constant&#10;B)zero.&#10;C)negative.&#10;D)a value that cannot be determined.

Accepted Answer

At the vertex of the isoquant, one input is fixed at its maximum value, and increasing the other input will not increase the output. Therefore, the marginal productivity of the input that is being increased is zero.

Question 10

The marginal physical productivity of labor is&#10;A)the slope of the total output curve at the relevant point.&#10;B)the negative of the slope of the total output curve at the relevant point.&#10;C)the slope of the line connecting the origin with the relevant point on the total output curve.&#10;D)the negative of the slope of the line connecting the origin with the relevant point on the total output curve.

Accepted Answer

The marginal physical productivity of labor refers to the additional output that is produced by adding one more unit of labor to the production process. Therefore, it can be represented by the slope of the total output curve at the relevant point, since this slope shows the rate at which output is increasing with each additional unit of labor.

Question 11

Which of the following production functions exhibits a constant elasticity of substitution?&#10;A)q = 3k + 2l.&#10;B) $q = k ^ { 0~5 } l ^ { 0~5 }$ .&#10;C) $q = l - \frac { l } { k } - \frac { l } { l }$ .&#10;D)All of these production functions have a constant elasticity of substitution.

Accepted Answer

The answer of Which of the following production functions exhibits...

Question 12

Consider the production function . For this function to have diminishing marginal productivities and increasing returns to scale,it must be the case that A)α > 1 αβ < 1. B)α > 1 αβ > 1. C)α < 1 αβ < 1. D)α < 1 αβ > 1.

Accepted Answer

The answer of Consider the production function   ....

Question 13

The marginal rate of technical substitution (RTS)of labor for capital measures&#10;A)the amount by which capital input can be reduced while holding quantity produced constant when one more unit of labor is used.&#10;B)the amount by which labor input can be reduced while holding quantity produced constant when one more unit of capital is used.&#10;C)the ratio of total labor to total capital.&#10;D)the ratio of total capital to total labor. .

Accepted Answer

The answer of The marginal rate of technical substitution (RTS)of...

Question 14

The production function   exhibits&#10;A)increasing returns to scale and diminishing marginal products for both K and L.&#10;B)increasing returns to scale and diminishing marginal product for L only.&#10;C)increasing returns to scale but no diminishing marginal productivities.&#10;D)decreasing returns to scale.

Accepted Answer

The answer of The production function   exhibits&#10;A)increasing returns...

Deck 7: Production Functions