Question 1

(Figure: Capital and Labor XVI) Consider the production function Q = L^0.5K^0.5, with MP_K = L^0.5/K^0.5 and MP_L = K^0.5/L^0.5. The slope of the isoquant at Point A is ____.

Accepted Answer

A

Question 2

Which of the following statements is (are) TRUE?
I. If labor and capital are perfect substitutes in production, the isoquant is a downward-sloping line.
II. If a company needs to use inputs in fixed proportion such that the capital to labor ratio is always 2, the firm's isoquants are L-shaped.
III. If the production function is given by Q = min(14, 7), the firm can produce, at minimum, 21 units of output.

Accepted Answer

- I is true because when labor and capital are perfect substitutes, the firm can replace one input for another in production without affecting output, leading to a straight, downward-sloping isoquant.- II is true because if inputs must be used in a fixed proportion, the firm cannot substitute one input for another beyond a certain point, resulting in L-shaped isoquants.- III is false because the production function Q = min(14, 7) means the maximum output the firm can produce is the minimum of the two numbers, which is 7, not 21.

Question 3

(Table: Capital and Labor XIV) Consider the production function that this table shows.  Suppose the firm is using 3 units of capital and 2 units of labor and then decides to employ a third worker. The marginal product of the third worker is ____.

Accepted Answer

B

Question 4

(Figure: Capital and Labor VI) Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $200 per day and rental rate per unit of capital is $500 per day. The firm's isocost line at the current expenditure level is represented by:

Accepted Answer

The answer of (Figure: Capital and Labor VI) Suppose a...

Question 5

For the production function Q(K,L) = 3K + 2L, the marginal rate of technical substitution MRTS_LK is:

Accepted Answer

The MRTS is the rate at which labor can be substituted for capital while keeping output constant. For the linear production function Q(K,L) = 3K + 2L, MRTS_LK is the ratio of the marginal product of labor (2) to the marginal product of capital (3), which is 2/3.

Question 6

(Table: Short-run Production I) The short-run production situation for a firm is listed on this table.  The marginal product of labor with one unit of labor is ____.

Accepted Answer

The answer of (Table: Short-run Production I) The short-run production...

Question 7

(Table: Capital and Labor XIV) Consider the production function that this table shows.  Suppose the firm is using 2 units of capital and 1 unit of labor. The marginal product of capital for K = 3 is ____.

Accepted Answer

The answer of (Table: Capital and Labor XIV) Consider the...

Question 8

(Figure: Production Function I) Which of the following statements is (are) TRUE? I. At L = 5, MPT_L > AP_L. II) At L = 2, MP_L = AP_L. III) For this production function, MP_L is greater at L = 2 than at L = 8. IV) For this production function, MP_L is always greater than AP_L.

Accepted Answer

The answer of (Figure: Production Function I) Which of the...

Question 9

(Table: Capital and Labor XIV) Consider the production function that this table shows.  Suppose the firm is using 3 units of capital and 1 unit of labor. The marginal product of capital for K = 4 is ____.

Accepted Answer

The answer of (Table: Capital and Labor XIV) Consider the...

Question 10

(Figure: Capital and Labor XII) Which of the following statements is (are) TRUE?  
I. Panel a illustrates constant returns to scale.
II. Panel b illustrates decreasing returns to scale.
III. Panel a illustrates increasing returns to scale
IV. Panel b illustrates constant returns to scale.

Accepted Answer

The answer of (Figure: Capital and Labor XII) Which of...

Question 11

Capital cannot be adjusted in the short run because:

Accepted Answer

Capital cannot be adjusted in the short run primarily because there is not sufficient time to adjust it. Adjusting capital often involves significant planning, purchasing, and installation time, which cannot be accomplished quickly.

Question 12

(Table: Capital and Labor XIV) Consider the production function that this table shows.  With 4 units of labor and 2 units of capital, the level of output is ____.

Accepted Answer

The answer of (Table: Capital and Labor XIV) Consider the...

Question 13

(Table: Capital and Labor II) Which of the following statements is (are) TRUE?  I. A combination of 4 units of capital and 2 units of labor produces the same amount of output as a combination of 3 units of capital and 3 units of labor.
II) If labor is fixed at 3 units, adding more capital increases output at an increasing rate.
III) If capital is fixed at 2 units, adding more labor results in diminishing returns.
IV) A combination of 3 units of capital and 4 units of labor produces 171.4 units of output.

Accepted Answer

The answer of (Table: Capital and Labor II) Which of...

Question 14

(Table: Short-run Production I) The short-run production situation for a firm is listed on this table.  The total output with two units of labor is ____.

Accepted Answer

The answer of (Table: Short-run Production I) The short-run production...

Question 15

Suppose that a community health center finds that, regardless of the number of physicians or nurse practitioners employed, it can always replace one family practice physician by using two additional nurse practitioners without affecting the quantity or quality of patient office visits. This finding implies that:

Accepted Answer

This implies that physicians and nurse practitioners can be substituted for each other in a fixed ratio (1 physician = 2 nurse practitioners) without affecting output, indicating they are perfect substitutes in production.

Question 16

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of labor is ____.

Accepted Answer

The marginal product of labor (MPL) is the partial derivative of the production function with respect to L, which in this case simplifies to 4K²L, indicating the increase in output (Q) resulting from a one-unit increase in labor (L) while holding capital (K) constant.

Question 17

Suppose the production function for a coffee shop is:
Q = 2K + 5L
Where Q is the number of cups of coffee produced, K is the number of coffee makers, and L is the number of workers. The function for the marginal product of labor is ____.

Accepted Answer

The marginal product of labor (MPL) is the additional output produced by adding one more unit of labor, holding all other inputs constant. In the given production function Q = 2K + 5L, the coefficient of L (labor) is 5, which directly represents the MPL, indicating that each additional worker produces 5 more cups of coffee.

Question 18

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 Where Q is the number of loaves of bread produced per day, K is the number of ovens, and L is the number of workers employed. The function for the marginal rate of technical substitution is ____.

Accepted Answer

The answer of Suppose the production function for a bakery...

Question 19

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Accepted Answer

The answer of Suppose the production function for a car...

Question 20

Suppose a firm is producing 2,475 units of output by hiring 50 workers (W = $20 per hour) and 25 units of capital (R = $10 per hour). The marginal product of labor and marginal product of capital are 40 and 25, respectively. Is the firm minimizing the cost of producing 2,475 units of output?

Accepted Answer

To minimize costs while producing a certain output, a firm should equate the ratio of the marginal product of labor (MPL) to the wage (W) with the ratio of the marginal product of capital (MPK) to the rental rate of capital (R). Here, MPL/W = 40/20 = 2 and MPK/R = 25/10 = 2.5. Since the MPK/R is higher, the firm should use more capital and less labor to minimize costs, as it gets more output per dollar spent on capital than on labor.

Quiz 6: Producer Behavior

(Figure: Capital and Labor XVI) Consider the production function Q = L^0.5K^0.5, with MP_K = L^0.5/K^0.5 and MP_L = K^0.5/L^0.5. The slope of the isoquant at Point A is ____.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 3 units of capital and 2 units of labor and then decides to employ a third worker. The marginal product of the third worker is ____.

(Figure: Capital and Labor VI) Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $200 per day and rental rate per unit of capital is $500 per day. The firm's isocost line at the current expenditure level is represented by:

For the production function Q(K,L) = 3K + 2L, the marginal rate of technical substitution MRTS_LK is:

(Table: Short-run Production I) The short-run production situation for a firm is listed on this table. The marginal product of labor with one unit of labor is ____.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 2 units of capital and 1 unit of labor. The marginal product of capital for K = 3 is ____.

(Figure: Production Function I) Which of the following statements is (are) TRUE? I. At L = 5, MPT_L > AP_L. II) At L = 2, MP_L = AP_L. III) For this production function, MP_L is greater at L = 2 than at L = 8. IV) For this production function, MP_L is always greater than AP_L.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 3 units of capital and 1 unit of labor. The marginal product of capital for K = 4 is ____.

(Figure: Capital and Labor XII) Which of the following statements is (are) TRUE? I. Panel a illustrates constant returns to scale. II. Panel b illustrates decreasing returns to scale. III. Panel a illustrates increasing returns to scale IV. Panel b illustrates constant returns to scale.

Capital cannot be adjusted in the short run because:

(Table: Capital and Labor XIV) Consider the production function that this table shows. With 4 units of labor and 2 units of capital, the level of output is ____.

(Table: Short-run Production I) The short-run production situation for a firm is listed on this table. The total output with two units of labor is ____.

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of labor is ____.

Suppose the production function for a coffee shop is: Q = 2K + 5L Where Q is the number of cups of coffee produced, K is the number of coffee makers, and L is the number of workers. The function for the marginal product of labor is ____.

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 Where Q is the number of loaves of bread produced per day, K is the number of ovens, and L is the number of workers employed. The function for the marginal rate of technical substitution is ____.

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Suppose a firm is producing 2,475 units of output by hiring 50 workers (W = $20 per hour) and 25 units of capital (R = $10 per hour) . The marginal product of labor and marginal product of capital are 40 and 25, respectively. Is the firm minimizing the cost of producing 2,475 units of output?

Quiz 6: Producer Behavior

(Figure: Capital and Labor XVI) Consider the production function Q = L0.5K0.5, with MPK = L0.5/K0.5 and MPL = K0.5/L0.5. The slope of the isoquant at Point A is ____.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 3 units of capital and 2 units of labor and then decides to employ a third worker. The marginal product of the third worker is ____.

(Figure: Capital and Labor VI) Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $200 per day and rental rate per unit of capital is $500 per day. The firm's isocost line at the current expenditure level is represented by:

For the production function Q(K,L) = 3K + 2L, the marginal rate of technical substitution MRTSLK is:

(Table: Short-run Production I) The short-run production situation for a firm is listed on this table. The marginal product of labor with one unit of labor is ____.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 2 units of capital and 1 unit of labor. The marginal product of capital for K = 3 is ____.

(Figure: Production Function I) Which of the following statements is (are) TRUE? I. At L = 5, MPTL > APL. II) At L = 2, MPL = APL. III) For this production function, MPL is greater at L = 2 than at L = 8. IV) For this production function, MPL is always greater than APL.

(Table: Capital and Labor XIV) Consider the production function that this table shows. Suppose the firm is using 3 units of capital and 1 unit of labor. The marginal product of capital for K = 4 is ____.

(Figure: Capital and Labor XII) Which of the following statements is (are) TRUE? I. Panel a illustrates constant returns to scale. II. Panel b illustrates decreasing returns to scale. III. Panel a illustrates increasing returns to scale IV. Panel b illustrates constant returns to scale.

Capital cannot be adjusted in the short run because:

(Table: Capital and Labor XIV) Consider the production function that this table shows. With 4 units of labor and 2 units of capital, the level of output is ____.

(Table: Short-run Production I) The short-run production situation for a firm is listed on this table. The total output with two units of labor is ____.

Suppose the production function for a car manufacturer is: Q = 2K2L2 Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of labor is ____.

Suppose the production function for a coffee shop is: Q = 2K + 5L Where Q is the number of cups of coffee produced, K is the number of coffee makers, and L is the number of workers. The function for the marginal product of labor is ____.

Suppose the production function for a bakery is: Q = 4K0.4L0.6 Where Q is the number of loaves of bread produced per day, K is the number of ovens, and L is the number of workers employed. The function for the marginal rate of technical substitution is ____.

Suppose the production function for a car manufacturer is: Q = 2K2L2 Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.

Suppose a firm is producing 2,475 units of output by hiring 50 workers (W = $20 per hour) and 25 units of capital (R = $10 per hour) . The marginal product of labor and marginal product of capital are 40 and 25, respectively. Is the firm minimizing the cost of producing 2,475 units of output?

(Figure: Capital and Labor XVI) Consider the production function Q = L^0.5K^0.5, with MP_K = L^0.5/K^0.5 and MP_L = K^0.5/L^0.5. The slope of the isoquant at Point A is ____.

For the production function Q(K,L) = 3K + 2L, the marginal rate of technical substitution MRTS_LK is:

(Figure: Production Function I) Which of the following statements is (are) TRUE? I. At L = 5, MPT_L > AP_L. II) At L = 2, MP_L = AP_L. III) For this production function, MP_L is greater at L = 2 than at L = 8. IV) For this production function, MP_L is always greater than AP_L.

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal product of labor is ____.

Suppose the production function for a bakery is: Q = 4K^0.4L^0.6 Where Q is the number of loaves of bread produced per day, K is the number of ovens, and L is the number of workers employed. The function for the marginal rate of technical substitution is ____.

Suppose the production function for a car manufacturer is: Q = 2K²L² Where Q is the number of cars produced, K is the number of machine hours used, and L is the number of worker hours used. The function for the marginal rate of technical substitution is ____.