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:
Its price falls.

In the table below, the average product of labor at L = 3 is:
APL=Q/L

In the table below, the marginal product of labor at L = 4 is:

MPL=change in Q / change in L

The law of diminishing marginal returns states that:
the marginal product of a factor eventually diminishes as more of the input is used, holding other inputs fixed

The following table shows the total output per hour produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $12.
Table 5-1

Refer to Table 5-1. Diminishing returns occurs beyond:
3 Workers

Which of the following correctly describes a production isoquant?
An isoquant is a curve that shows all possible combinations of inputs that can produce a given level of output.