Microeconomics and Behavior 9th Edition Frank Test Bank

Microeconomics and Behavior 9th
Edition Frank Test Bank

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Chapter 08
Production
Multiple Choice Questions
1. In a typical production function, the relevant factors of production are land, labor, capital, and
A. raw materials.
B. technology.
C. entrepreneurship.
D. resources.
2. In a value added production function like the one used in the text, raw materials are
A. counted as inputs in a production process.
B. called intermediate goods.
C. are counted in the final product of any production process as part of the value of output.
D. called final goods.
8-1
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McGraw-Hill Education.
3. Which is true?
A. Production functions consider only the value added part of a particular production process.
B. Production functions are as subjective as utility functions.
C. Production functions count raw materials, but not labor, as inputs into the production process.
D. Production functions do not count technology into the production process.
4. If a chef and her equipment transform $50 worth of raw foodstuff into a meal with a total value of
$150, the resulting output would be
A. measured as the $150 total value.
B. referred to as an intermediate product.
C. measured as the $100 of value added.
D. measured as $200 of value added.
5. In the long run
A. all inputs are fixed.
B. only capital inputs are fixed.
C. all intermediate goods are fixed.
D. all inputs are variable.
6. A fixed input is an input that
A. can never be varied.
B. cannot be varied in the short-run.
C. is fixed only for some quantities of output.
D. can never be moved from one location to the next.
8-2
7. The short run is defined as that period of time during which
A. one or more inputs cannot be freely varied.
B. all inputs are variable.
C. all inputs are fixed.
D. labor is counted as a fixed input.
8. If capital and labor are perfect substitutes in a production function, the isoquants for this function
will be
A. concave from above.
B. convex from above.
C. a straight line.
D. any one of these depending on the particular combination of labor and capital employed.
9. If equal amounts of a variable input are sequentially added to the fixed input in a typical
production function,
A. the increments to output will decrease first and then increase.
B. the additions to output will be constant.
C. increments to output will increase indefinitely.
D. increments to output will first increase at an increasing rate and then at a decreasing rate.
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10. The nineteenth-century British economist Thomas Malthus argued that the law of diminishing
returns implied that
A. capital would increase relative to labor.
B. technological change would grow at an increasing pace.
C. eventual misery would befall the human race.
D. raw materials would eventually run out.
11. When Thomas Malthus argued that the prospects for human flourishing were gloomy and that
starvation would eventually become the normal human condition, he was assuming that
A. diseconomies of scale will become more commonplace.
B. diminishing returns to production will become more apparent.
C. epidemics will overpower the many technological advances that he expected.
D. self-interest will become more intense and religion will cease to be an influential force in society.
12. The marginal product of a variable input is
A. zero at the point of diminishing returns.
B. the change in the average product that occurs when the variable input is increased one unit.
C. the change in the total product that occurs in response to a unit change in the variable input.
D. the second derivative of the total product function.
8-4
13. The law of diminishing returns to an input says that if other inputs are fixed
A. output eventually will decrease with increases of the variable input.
B. change in output will eventually decrease with increases in the variable input.
C. revenue will eventually decrease with increases in the variable input.
D. the variable input will eventually decrease with more output.
14. The average product of a variable input
A. decreases at an increasing rate.
B. constantly rises over the relevant range of production.
C. is the change in the total product that occurs when the variable input increases one unit.
D. is defined as the total product divided by the quantity of the variable input.
15. Geometrically, the marginal product
A. is the slope of the line joining the origin to the corresponding point on the total product curve.
B. at any point is the slope of the total product curve at that point.
C. is that point at which the total product curve exhibits diminishing returns.
D. is the slope of the average product curve.
16. Geometrically, the average product
A. is the slope of the line joining the origin to the specified point on the total product curve.
D. falls at low levels of input use and rises at high levels of input use.
8-5
17. In a typical short-run production function, before diminishing returns set in, the slope of the total
product curve
A. is decreasing.
B. is increasing.
C. rises and then falls before diminishing returns sets in.
D. falls and then rises before diminishing returns sets in.
18. In a short-run production function before diminishing returns set in, both MPL and APL will have
A. positive slopes and MPL will lie above APL.
B. positive slopes and APL will lie above MPL.
C. negative slopes and MPL will lie above APL.
D. negative slopes and APL will lie above MPL.
19. Diminishing returns begin to occur when the
A. slope of the ray from the origin reaches a maximum.
B. total product curve reaches a maximum.
C. slope of the total product curve reaches a maximum.
D. marginal product curve intersects the average product curve.
20. When the marginal product curve lies above the average product curve
A. the average product curve must be falling.
B. the total product curve must be falling.
C. the average product curve must be rising.
D. the marginal product curve must be rising.
8-6
21. Say you are the owner of a Pizza place. You know that when you produce 10 pizzas, the average
product of each of your workers is 10, and the marginal product of your last worker is 15. From this
information you know that
A. the marginal product is increasing.
B. the average product is increasing.
C. the average product is decreasing.
D. the marginal product is decreasing.
22. If the contribution to output of an additional unit of the variable input exceeds the average
contribution of the variable inputs used,
A. the average contribution must rise.
B. the average contribution must fall.
C. the total product will begin to decline.
D. the average product will be at its minimum.
23. When the marginal product curve lies below the average product curve,
8-7
24. The general rule for allocating a productive resource efficiently across different production
activities of the same product, like fishing boats in the text case example, is to choose the
allocation for which the
A. average product of the resource is the same in every activity.
B. marginal product of the resource is the same in every activity.
C. total product of the resource is the same in every activity.
D. average product is equal to the marginal product in every activity.
25. The rate at which one input can be exchanged for another without altering output is called
A. the slope of the total product curve.
B. the marginal rate of technical substitution.
C. the slope of the marginal product of labor.
D. the law of diminishing returns of labor.
26. On an isoquant, the MRTS is defined as
A. .
B. MPK/MPL at the relevant point on the isoquant.
C. MPL * MPK.
D. MP + MPL.
8-8
27. Say you own a Mexican place that produces, among other things, Mexican burritos. Your
production of burritos is given by the equation Q = 6KL2, where Q is the amount of burritos, K is
the amount of capital and L is the amount of labor. How many workers would you need to use in
order to minimize the cost of producing 100 burritos when the capital is, K, is 20?
A. 1
B. 2
C. 4
D. 0
28. From an isoquant map, one can illustrate diminishing returns to production by
A. observing the slope of the isoquant as one moves outward on the labor axis but stays at the
same point on the capital axis.
B. following the curvature of an individual isoquant.
C. moving from isoquant to isoquant along a ray from the origin.
D. constructing a positively sloped isoquant.
29. A production function for which proportional changes in all inputs leads to a more-than-
proportional change in output is said to exhibit
A. diminishing returns.
B. decreasing returns to scale.
C. constant returns to scale.
D. increasing returns to scale.
8-9
30. For any constant returns production function, the isoquants for Q = 1, Q = 2, Q = 3, etc. will
A. all be inversely proportional to the inputs.
B. exhibit diminishing returns in the long run.
C. be straight lines.
D. be equally spaced, in that the distance between Q = 1 and Q = 2 is the same as Q = 2 and Q =
3, etc.
31. Say you own a Mexican place that produces, among other things, Mexican burritos. The marginal
product of your last worker was 5. If the marginal rate of technical substitution between capital and
labor is 0.5, then marginal product of capital is
A. 10.
B. 5.
C. 1.
D. we can't say with the information given
32. For production functions with decreasing returns to scale, a proportional increase in output
A. requires a less-than-proportional growth in all inputs.
B. requires a more-than-proportional growth in all inputs.
C. exhibits diminishing returns.
D. requires proportional growth in all inputs.
8-10
33. Returns to scale refers to
A. what happens to output when at least one input is fixed and one is varied.
B. what happens to output when all inputs are held fixed.
C. what happens to output when all inputs are varied in some proportion.
D. the law of diminishing returns.
34. The isoquant mapping for perfect complements in production is
A. L-shaped.
B. a straight line.
C. a ray passing through the origin.
D. concave.
35. Which of the following statements about isoquant maps is true?
A. They can illustrate diminishing returns to production only when they have numerical values
attached.
B. They cannot illustrate economies of scale unless some numerical values are attached.
C. They always have positive slope.
D. They always have negative slope.
8-11
36. If the owner of an ice-cream stand told a student looking for summer work that he would not hire
him even if he worked for nothing, we can infer that
A. the marginal product of the labor is zero or less.
B. the average product of labor is rising.
C. the marginal product of labor is rising.
D. the owner is producing at the lowest cost.
37. In conceptual production functions, technological change is
A. treated like an addition to the capital stock.
B. treated as a movement upward along a given production function.
C. a factor that eliminates diminishing returns to a production function.
D. not considered and is therefore assumed to be constant in all deliberations.
38. On this chapter quiz for this course you can study for up to four hours. If you don't study at all you
will get a 70. One hour would give you an 80, the second hour increased your score to 89, the
third to 92. If you studied the fourth hour your score would be 87. In which hour did diminishing
returns set in?
A. The first because the score was the lowest of the studying options.
B. The second because your gain is less than the previous hour.
C. The third because your score peaked there.
D. The fourth because you had a drop in points in this hour.
8-12
39. Suppose you are using 10 units of labor in your short-run production process. At this point, the
average product of your labor is 10, and the marginal product of the last unit of labor was 14.
Given this, we know that the
A. average product of labor must be increasing.
B. average product of labor must be decreasing.
C. marginal product of labor must be increasing.
D. marginal product of labor must be decreasing.
40. Suppose that at a firm's current level of production the marginal product of capital is equal to 10
units, while the marginal rate of technical substitution between capital and labor is 2. Given this, we
know the marginal product of labor must be
A. 5.
B. 20.
C. 10.
D. It is not possible to say with the information given in the problem
41. In the production of bicycles an increase of 2 percent in the level of capital and labor respectively
will generate an increase of 1 percent in the production of bicycles. From this information we know
that the production of bicycles exhibits
A. diminishing marginal returns.
C. increasing returns to scale.
D. constant returns to scale.
8-13
42. What will happen to a typical isoquant if robots become increasingly good at doing manual and
mental labor?
A. Isoquants will become much steeper.
B. Isoquants will not change but movement will occur upward on the curve.
C. Isoquants will become much flatter.
D. Isoquants will become a negatively sloped straight line.
43. Karl has a home business that consists of only himself and his computer. If he were to analyze his
operations in the form of a long run production function his isoquants would
A. be straight lines with a negative slope.
B. be L shaped.
C. be concave from above.
D. be straight lines with a positive slope.
44. If climate change starts creating earthquakes, storms, droughts and all manner of obstacles to
production operations, the effects can be shown on effected production function graphs by
A. eliminating the increasing returns portion of the short run production function.
B. lowering the short run production function and reducing the numbers on each isoquant.
C. changing the curves of the isoquants to straight lines.
D. eliminating long run production functions because they are irrelevant.
8-14
45. (Appendix) Which of the following production functions exhibits increasing returns to scale?
A. Q = K1/2Ll/2
B. Q = Kl/2L2/3
C. Q = Kl/4Ll/3
D. Q = K/L
46. (Appendix) The defining characteristics of increasing returns to scale may be summarized as
A. F(cK,cL) > cF(K,L).
B. F(cK,cL) = cF(K,L).
C. F(cK,cL) < cF(K,L).
D. Q = min(aK,aL).
47. (Appendix) Suppose the production function for widgets is Q = (KL)½. If capital is fixed at 4 units,
what is the marginal product of labor when you produce 10 units of output?
A. 0.4
B. 1
C. 1.5
D. 0.2
Essay Questions
8-15
48. Sketch graph a standard short-run production function, and identify on it the points where the
average product peaks, the marginal product peaks, the marginal product reaches zero, and the
average and marginal product intersect.
49. Several years ago while teaching in Russia, I was using a production function like the ones used in
this text. Output is a function of labor, capital and technology. One professor asked me how I
could talk about production without including all the inputs that go into the process. Write a
response to this professor from what you know of a production function.
You should focus on the concept of value added production.
8-16
50. One of the main differences between production processes among different parts of the world has
to do with the quality of capital. Many development economists point out the fact that high-
income countries usually have access to more and better capital than less-developed counties.
What would be the effect of this difference in terms of isoquants used by high-income countries
versus the isoquants used by low-income countries? Use an isoquant map in order to illustrate
your answer.
51. Sketch a long-run production function with isoquants numbered so that the graph clearly shows
increasing returns to scale over the entire range of production.
8-17
52. (Appendix) A daily production function for calculators is Q = 12L 2 - L3. Show all your work for the
following questions.
a) What is the marginal product equation for labor?

b) What is the APL function?
53. (Appendix) In the production function Q = 10L 1/2K1/2 calculate the marginal product equations of
both inputs.
8-18
54. (Appendix) In the production function Q = 10L 1/2K1/2, calculate the slope of the isoquant when the
entrepreneur is producing efficiently with 9 laborers and 16 units of capital. (Hint: The slope of the
isoquant = the ratio of the marginal product of labor to the marginal product of capital.)
55. (Appendix) In the production function Q = 10L1/2K1/2, if the inputs are quadrupled, are there
economies of scale?
8-19
56. (Appendix) In the production function Q = 10L 1/2K1/2, is diminishing returns a characteristic of this
production function?
8-20
Chapter 08 Production Answer Key
Multiple Choice Questions
1. In a typical production function, the relevant factors of production are land, labor, capital, and
A. raw materials.
B. technology.
C. entrepreneurship.
D. resources.
AACSB: Reflective Thinking

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-01 Explain how the relationship between output and the factors of production employed to produce it
can be summarized in the form of a production function.
Topic: The Input-Output Relationship, or Production Function
2. In a value added production function like the one used in the text, raw materials are
A. counted as inputs in a production process.
B. called intermediate goods.
C. are counted in the final product of any production process as part of the value of output.
D. called final goods.

Blooms: Remember
Difficulty: 1 Easy
8-21
3. Which is true?
A. Production functions consider only the value added part of a particular production process.
B. Production functions are as subjective as utility functions.
C. Production functions count raw materials, but not labor, as inputs into the production
process.
D. Production functions do not count technology into the production process.

Blooms: Understand
Difficulty: 2 Medium
4. If a chef and her equipment transform $50 worth of raw foodstuff into a meal with a total value
of $150, the resulting output would be
A. measured as the $150 total value.
B. referred to as an intermediate product.
C. measured as the $100 of value added.
D. measured as $200 of value added.

Blooms: Understand
8-22
5. In the long run
A. all inputs are fixed.
B. only capital inputs are fixed.
C. all intermediate goods are fixed.
D. all inputs are variable.

Blooms: Understand
6. A fixed input is an input that
A. can never be varied.
B. cannot be varied in the short-run.
C. is fixed only for some quantities of output.
D. can never be moved from one location to the next.

Blooms: Remember
Difficulty: 1 Easy
8-23
7. The short run is defined as that period of time during which
A. one or more inputs cannot be freely varied.
B. all inputs are variable.
C. all inputs are fixed.
D. labor is counted as a fixed input.

Blooms: Remember
Difficulty: 1 Easy
Topic: Production in the Short Run
8. If capital and labor are perfect substitutes in a production function, the isoquants for this
function will be
A. concave from above.
B. convex from above.
C. a straight line.
D. any one of these depending on the particular combination of labor and capital employed.

Blooms: Understand
Learning Objective: 08-06 Define a production isoquant and show how an isoquant map can be used to describe the production
function in the long run.
Topic: Production in the Long Run
8-24
9. If equal amounts of a variable input are sequentially added to the fixed input in a typical
production function,
A. the increments to output will decrease first and then increase.
B. the additions to output will be constant.
C. increments to output will increase indefinitely.
D. increments to output will first increase at an increasing rate and then at a decreasing rate.

Blooms: Understand
Learning Objective: 08-04 Explain how the average and marginal product of a variable input are related and explain why optimal
allocation of a factor or production across multiple activities requires that its marginal product be the same in each.
Topic: Total, Marginal, and Average Products
10. The nineteenth-century British economist Thomas Malthus argued that the law of diminishing
returns implied that
A. capital would increase relative to labor.
B. technological change would grow at an increasing pace.
C. eventual misery would befall the human race.
D. raw materials would eventually run out.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-02 Describe the law of diminishing returns and explain how it is often rooted in bottlenecks that occur
when some factors of production are fixed.
8-25
11. When Thomas Malthus argued that the prospects for human flourishing were gloomy and that
starvation would eventually become the normal human condition, he was assuming that
A. diseconomies of scale will become more commonplace.
B. diminishing returns to production will become more apparent.
C. epidemics will overpower the many technological advances that he expected.
D. self-interest will become more intense and religion will cease to be an influential force in
society.

Blooms: Remember
Difficulty: 1 Easy
12. The marginal product of a variable input is
A. zero at the point of diminishing returns.
B. the change in the average product that occurs when the variable input is increased one unit.
C. the change in the total product that occurs in response to a unit change in the variable
input.
D. the second derivative of the total product function.

Blooms: Remember
Difficulty: 1 Easy
8-26
13. The law of diminishing returns to an input says that if other inputs are fixed
A. output eventually will decrease with increases of the variable input.
B. change in output will eventually decrease with increases in the variable input.
C. revenue will eventually decrease with increases in the variable input.
D. the variable input will eventually decrease with more output.

Blooms: Remember
Difficulty: 1 Easy
14. The average product of a variable input
A. decreases at an increasing rate.
B. constantly rises over the relevant range of production.
C. is the change in the total product that occurs when the variable input increases one unit.
D. is defined as the total product divided by the quantity of the variable input.

Blooms: Remember
Difficulty: 1 Easy
8-27
15. Geometrically, the marginal product
A. is the slope of the line joining the origin to the corresponding point on the total product
curve.
D. is the slope of the average product curve.

Blooms: Remember
Difficulty: 1 Easy
16. Geometrically, the average product
A. is the slope of the line joining the origin to the specified point on the total product curve.
D. falls at low levels of input use and rises at high levels of input use.

Blooms: Remember
Difficulty: 1 Easy
8-28
17. In a typical short-run production function, before diminishing returns set in, the slope of the
total product curve
A. is decreasing.
B. is increasing.
C. rises and then falls before diminishing returns sets in.
D. falls and then rises before diminishing returns sets in.

Blooms: Understand
18. In a short-run production function before diminishing returns set in, both MPL and APL will
have
A. positive slopes and MPL will lie above APL.
B. positive slopes and APL will lie above MPL.
C. negative slopes and MPL will lie above APL.
D. negative slopes and APL will lie above MPL.

Blooms: Understand
8-29
19. Diminishing returns begin to occur when the
A. slope of the ray from the origin reaches a maximum.
B. total product curve reaches a maximum.
C. slope of the total product curve reaches a maximum.
D. marginal product curve intersects the average product curve.

Blooms: Understand
20. When the marginal product curve lies above the average product curve

Blooms: Remember
Difficulty: 1 Easy
8-30
21. Say you are the owner of a Pizza place. You know that when you produce 10 pizzas, the
average product of each of your workers is 10, and the marginal product of your last worker is
15. From this information you know that
A. the marginal product is increasing.
B. the average product is increasing.
C. the average product is decreasing.
D. the marginal product is decreasing.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
22. If the contribution to output of an additional unit of the variable input exceeds the average
contribution of the variable inputs used,
A. the average contribution must rise.
B. the average contribution must fall.
C. the total product will begin to decline.
D. the average product will be at its minimum.

Blooms: Understand
8-31
23. When the marginal product curve lies below the average product curve,

Blooms: Understand
24. The general rule for allocating a productive resource efficiently across different production
activities of the same product, like fishing boats in the text case example, is to choose the
allocation for which the
A. average product of the resource is the same in every activity.
B. marginal product of the resource is the same in every activity.
C. total product of the resource is the same in every activity.
D. average product is equal to the marginal product in every activity.

Blooms: Understand
8-32
25. The rate at which one input can be exchanged for another without altering output is called
A. the slope of the total product curve.
B. the marginal rate of technical substitution.
C. the slope of the marginal product of labor.
D. the law of diminishing returns of labor.

Blooms: Remember
Difficulty: 1 Easy
26. On an isoquant, the MRTS is defined as
A. .
B. MPK/MPL at the relevant point on the isoquant.
C. MPL * MPK.
D. MP + MPL.

Blooms: Remember
Difficulty: 1 Easy
8-33
27. Say you own a Mexican place that produces, among other things, Mexican burritos. Your
production of burritos is given by the equation Q = 6KL2, where Q is the amount of burritos, K
is the amount of capital and L is the amount of labor. How many workers would you need to
use in order to minimize the cost of producing 100 burritos when the capital is, K, is 20?
A. 1
B. 2
C. 4
D. 0
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
28. From an isoquant map, one can illustrate diminishing returns to production by
A. observing the slope of the isoquant as one moves outward on the labor axis but stays at the
same point on the capital axis.
B. following the curvature of an individual isoquant.
C. moving from isoquant to isoquant along a ray from the origin.
D. constructing a positively sloped isoquant.

Blooms: Understand
8-34
29. A production function for which proportional changes in all inputs leads to a more-than-
proportional change in output is said to exhibit
A. diminishing returns.
C. constant returns to scale.
D. increasing returns to scale.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-07 Distinguish between decreasing; constant; and increasing returns in the long run.
Topic: Returns to Scale
30. For any constant returns production function, the isoquants for Q = 1, Q = 2, Q = 3, etc. will
A. all be inversely proportional to the inputs.
B. exhibit diminishing returns in the long run.
C. be straight lines.
D. be equally spaced, in that the distance between Q = 1 and Q = 2 is the same as Q = 2 and
Q = 3, etc.

Blooms: Understand
8-35
31. Say you own a Mexican place that produces, among other things, Mexican burritos. The
marginal product of your last worker was 5. If the marginal rate of technical substitution
between capital and labor is 0.5, then marginal product of capital is
A. 10.
B. 5.
C. 1.
D. we can't say with the information given
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
32. For production functions with decreasing returns to scale, a proportional increase in output
A. requires a less-than-proportional growth in all inputs.
B. requires a more-than-proportional growth in all inputs.
C. exhibits diminishing returns.
D. requires proportional growth in all inputs.

Blooms: Understand
8-36
33. Returns to scale refers to
A. what happens to output when at least one input is fixed and one is varied.
B. what happens to output when all inputs are held fixed.
C. what happens to output when all inputs are varied in some proportion.
D. the law of diminishing returns.

Blooms: Remember
Difficulty: 1 Easy
34. The isoquant mapping for perfect complements in production is
A. L-shaped.
B. a straight line.
C. a ray passing through the origin.
D. concave.

Blooms: Understand
8-37
35. Which of the following statements about isoquant maps is true?
A. They can illustrate diminishing returns to production only when they have numerical values
attached.
B. They cannot illustrate economies of scale unless some numerical values are attached.
C. They always have positive slope.
D. They always have negative slope.

Blooms: Understand
36. If the owner of an ice-cream stand told a student looking for summer work that he would not
hire him even if he worked for nothing, we can infer that
A. the marginal product of the labor is zero or less.
B. the average product of labor is rising.
C. the marginal product of labor is rising.
D. the owner is producing at the lowest cost.

Blooms: Understand
8-38
37. In conceptual production functions, technological change is
A. treated like an addition to the capital stock.
B. treated as a movement upward along a given production function.
C. a factor that eliminates diminishing returns to a production function.
D. not considered and is therefore assumed to be constant in all deliberations.

Blooms: Understand
Learning Objective: 08-03 Describe how technical progress shifts the production function over time.
38. On this chapter quiz for this course you can study for up to four hours. If you don't study at all
you will get a 70. One hour would give you an 80, the second hour increased your score to 89,
the third to 92. If you studied the fourth hour your score would be 87. In which hour did
diminishing returns set in?
A. The first because the score was the lowest of the studying options.
B. The second because your gain is less than the previous hour.
C. The third because your score peaked there.
D. The fourth because you had a drop in points in this hour.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
8-39
39. Suppose you are using 10 units of labor in your short-run production process. At this point, the
average product of your labor is 10, and the marginal product of the last unit of labor was 14.
Given this, we know that the
A. average product of labor must be increasing.
B. average product of labor must be decreasing.
C. marginal product of labor must be increasing.
D. marginal product of labor must be decreasing.

Blooms: Understand
40. Suppose that at a firm's current level of production the marginal product of capital is equal to
10 units, while the marginal rate of technical substitution between capital and labor is 2. Given
this, we know the marginal product of labor must be
A. 5.
B. 20.
C. 10.
D. It is not possible to say with the information given in the problem
AACSB: Analytic
Blooms: Apply
8-40
41. In the production of bicycles an increase of 2 percent in the level of capital and labor
respectively will generate an increase of 1 percent in the production of bicycles. From this
information we know that the production of bicycles exhibits
A. diminishing marginal returns.
C. increasing returns to scale.
D. constant returns to scale.

Blooms: Understand
42. What will happen to a typical isoquant if robots become increasingly good at doing manual
and mental labor?
A. Isoquants will become much steeper.
B. Isoquants will not change but movement will occur upward on the curve.
C. Isoquants will become much flatter.
D. Isoquants will become a negatively sloped straight line.

Blooms: Understand
8-41
43. Karl has a home business that consists of only himself and his computer. If he were to analyze
his operations in the form of a long run production function his isoquants would
A. be straight lines with a negative slope.
B. be L shaped.
C. be concave from above.
D. be straight lines with a positive slope.

Blooms: Understand
44. If climate change starts creating earthquakes, storms, droughts and all manner of obstacles to
production operations, the effects can be shown on effected production function graphs by
A. eliminating the increasing returns portion of the short run production function.
B. lowering the short run production function and reducing the numbers on each isoquant.
C. changing the curves of the isoquants to straight lines.
D. eliminating long run production functions because they are irrelevant.

Blooms: Understand
8-42
45. (Appendix) Which of the following production functions exhibits increasing returns to scale?
A. Q = K1/2Ll/2
B. Q = Kl/2L2/3
C. Q = Kl/4Ll/3
D. Q = K/L

Blooms: Understand
Topic: Appendix: A Mathematical Definition of Returns to Scale
46. (Appendix) The defining characteristics of increasing returns to scale may be summarized as
A. F(cK,cL) > cF(K,L).
B. F(cK,cL) = cF(K,L).
C. F(cK,cL) < cF(K,L).
D. Q = min(aK,aL).

Blooms: Understand
8-43
47. (Appendix) Suppose the production function for widgets is Q = (KL) ½. If capital is fixed at 4
units, what is the marginal product of labor when you produce 10 units of output?
A. 0.4
B. 1
C. 1.5
D. 0.2
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Topic: Appendix: Some Examples of Production Functions
Essay Questions
8-44
48. Sketch graph a standard short-run production function, and identify on it the points where the
average product peaks, the marginal product peaks, the marginal product reaches zero, and
the average and marginal product intersect.
Make sure the average product peaks at the output where the ray from the origin is tangent to
the total product curve and where the marginal product passes through it. The marginal
product must peak at the output where the inflection point is on the total product curve, and
the marginal product reaches zero when the total product peaks.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
8-45
49. Several years ago while teaching in Russia, I was using a production function like the ones used
in this text. Output is a function of labor, capital and technology. One professor asked me how I
could talk about production without including all the inputs that go into the process. Write a
response to this professor from what you know of a production function.

You should focus on the concept of value added production.
While intermediate goods do enter production processes, they are not part of the production
generated by the process under consideration. A car assembly plant performs the assembly
function in building cars. Its value added is far from the total value of the car. Therefore, the
total product in production functions is only that amount generated by the labor and capital
expended in that particular process.
AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
8-46
50. One of the main differences between production processes among different parts of the world
has to do with the quality of capital. Many development economists point out the fact that
high-income countries usually have access to more and better capital than less-developed
counties. What would be the effect of this difference in terms of isoquants used by high-income
countries versus the isoquants used by low-income countries? Use an isoquant map in order to
illustrate your answer.
In high income cases a small amount of capital substitutes for many workers and in the other
case it takes many units of capital to do what a few workers can do. Clearly the first case will
lead to higher productivity.
AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
8-47
51. Sketch a long-run production function with isoquants numbered so that the graph clearly
shows increasing returns to scale over the entire range of production.
The sketch should have isoquants numbered so that they have output increasing in greater
proportion that the proportion of increase in the inputs.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
52. (Appendix) A daily production function for calculators is Q = 12L 2 - L3. Show all your work for
the following questions.
a) What is the marginal product equation for labor?
b) What is the APL function?
a) MPL = 24L - 3L2;

b) APL = 12L - L2
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Topic: Appendix: Mathematical Extensions of Production Theory
8-48
53. (Appendix) In the production function Q = 10L 1/2K1/2 calculate the marginal product equations of
both inputs.
MPL = 5L-1/2K1/2
MPK = 5L1/2K-1/2
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
54. (Appendix) In the production function Q = 10L 1/2K1/2, calculate the slope of the isoquant when
the entrepreneur is producing efficiently with 9 laborers and 16 units of capital. (Hint: The slope
of the isoquant = the ratio of the marginal product of labor to the marginal product of capital.)
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
8-49
55. (Appendix) In the production function Q = 10L 1/2K1/2, if the inputs are quadrupled, are there
economies of scale?
There are constant returns to scale, so there are not increasing returns to scale.
AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
56. (Appendix) In the production function Q = 10L1/2K1/2, is diminishing returns a characteristic of

this production function?
AACSB: Analytic
Blooms: Analyze
Difficulty: 3 Hard
8-50

Microeconomics and Behavior 9th Edition Frank Test Bank

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Microeconomics and Behavior 9th Edition Frank Test Bank

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Microeconomics and Behavior 9th

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Multiple Choice Questions

A. counted as inputs in a production process.

B. called intermediate goods.

D. called final goods.

B. Production functions are as subjective as utility functions.

D. Production functions do not count technology into the production process.

$150, the resulting output would be

A. measured as the $150 total value.

B. referred to as an intermediate product.

C. measured as the $100 of value added.

D. measured as $200 of value added.

5. In the long run

A. all inputs are fixed.

B. only capital inputs are fixed.

C. all intermediate goods are fixed.

D. all inputs are variable.

6. A fixed input is an input that

A. can never be varied.

B. cannot be varied in the short-run.

C. is fixed only for some quantities of output.

D. can never be moved from one location to the next.

A. one or more inputs cannot be freely varied.

B. all inputs are variable.

C. all inputs are fixed.

D. labor is counted as a fixed input.

A. concave from above.

B. convex from above.

A. the increments to output will decrease first and then increase.

B. the additions to output will be constant.

C. increments to output will increase indefinitely.

returns implied that

A. capital would increase relative to labor.

B. technological change would grow at an increasing pace.

C. eventual misery would befall the human race.

D. raw materials would eventually run out.

A. diseconomies of scale will become more commonplace.

B. diminishing returns to production will become more apparent.

C. epidemics will overpower the many technological advances that he expected.

12. The marginal product of a variable input is

A. zero at the point of diminishing returns.

D. the second derivative of the total product function.

A. output eventually will decrease with increases of the variable input.

C. revenue will eventually decrease with increases in the variable input.

D. the variable input will eventually decrease with more output.

14. The average product of a variable input

A. decreases at an increasing rate.

B. constantly rises over the relevant range of production.

15. Geometrically, the marginal product

D. is the slope of the average product curve.

16. Geometrically, the average product

C. rises and then falls before diminishing returns sets in.

D. falls and then rises before diminishing returns sets in.

A. positive slopes and MPL will lie above APL.

B. positive slopes and APL will lie above MPL.

C. negative slopes and MPL will lie above APL.

D. negative slopes and APL will lie above MPL.

19. Diminishing returns begin to occur when the

A. slope of the ray from the origin reaches a maximum.

B. total product curve reaches a maximum.

C. slope of the total product curve reaches a maximum.

D. marginal product curve intersects the average product curve.

A. the average product curve must be falling.