Econ_ Chapter 5
If output is produced according to Q = K^(1/2) + 3 L^(1/2), then this production process
exhibits:
decreasing returns to scale
The production function for a competitive firm is Q = K^(.5)L^(.5). The firm sells its output
at a price of $10, and can hire labor at a wage of $5. Capital is fixed at one unit. The
maximum profits are
5.
An American economist visiting India observed that the roads were maintained by large
numbers of workers with picks and shovels and other hand tools, while the same work is
done in the United States by relatively small numbers of workers and mechanized devices.
He correctly concluded that the reason for this difference is that:
workers in the Unites States are paid more than Indian workers
Which of the following conditions is NOT true when a producer minimizes the cost of
producing a given level of output?
The marginal products of all inputs are equal.
Which of the following identifies the optimal usage of inputs by a profit-maximizing firm?
Marginal product of labor/price of labor = marginal product of capital/price of capital
Suppose the production function is given by Q = 3K + 4L. What is the average product of
capital when 5 units of capital and 10 units of labor are employed
11.
Which of the following production functions displays decreasing returns to scale?
Q = cL^(.2)K^(.5)
The marginal product of labor is defined by the:
change in output divided by the change in labor input usage
The short-run is best defined as the time period in which:
one or more inputs to production are fixed
Whenever average product is declining with increases in input usage:
marginal product is less than average product
The marginal revenue product of labor is equal to the product of:
the marginal revenue per unit of output and the marginal product of labor.
Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the
wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should
use
more labor and less capital.
In order to minimize the cost of producing a given level of output, a firm manager should use
more inputs when:
