SAMPLE MCQ

1) We typically think of labor as a variable cost, even in the very short run. However,
some labor
costs may be fixed. Which of the following items represents an example of a fixed labor
cost?
A) An hourly employee
B) A temporary worker who is paid by the hour
C) A salaried manager who has a three-year employment contract
D) none of the above

2) Which of the following is NOT an expression for the cost minimizing combination of
inputs?
A) MRTS = MPL /MPK
B) MPL/w = MPK/r
C) MRTS = w/r
D) MPL/MPK = w/r
E) none of the above

3) When an isocost line is just tangent to an isoquant, we know that

A) output is being produced at minimum cost.
B) output is not being produced at minimum cost.
C) the two products are being produced at the least input cost to the firm.
D) the two products are being produced at the highest input cost to the firm.

4) The total cost of producing a given level of output is

A) maximized when a corner solution exists.
B) minimized when the ratio of marginal product to input price is equal for all inputs.
C) minimized when the marginal products of all inputs are equal.
D) minimized when marginal product multiplied by input price is equal for all inputs.

5) Suppose that the price of labor (PL) is $10 and the price of capital (PK) is $20. What
is the
equation of the isocost line corresponding to a total cost of $100?
A) PL + 20PK
B) 100 = 10L + 20K
C) 100 = 30(L+K)
D) 100 + 30 PL + PK
E) none of the above