Microeconomics, 8e (Pindyck, Rubinfeld)Microeconomics
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Microeconomics, 8e (Pindyck/Rubinfeld)
Chapter 6 Production
6.1 Firms and Their Production Decisions
1) A production function defines the output that can be produced
A) at the lowest cost, given the inputs available.
B) for the average firm.
C) if the firm is technically efficient.
D) in a given time period if no additional inputs are hired.
E) as technology changes over time.
Answer: C
Diff: 2
Section: 6.1
2) A production function assumes a given
A) technology.
B) set of input prices.
C) ratio of input prices.
D) amount of capital and labor.
E) amount of output.
Answer: A
Diff: 1
Section: 6.1
3) A function that indicates the maximum output per unit of time that a firm can produce, for every
combination of inputs with a given technology, is called
A) an isoquant.
B) a production possibility curve.
C) a production function.
D) an isocost function.
Answer: C
Diff: 1
Section: 6.1
4) Use the following two statements to answer this question:
I. Production functions describe what is technically feasible when the firm operates efficiently.
II. The production function shows the least cost method of producing a given level of output.
A) Both I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) Both I and II are false.
Answer: B
Diff: 1
Section: 6.1
1
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5) A farmer uses L units of labor and K units of capital to produce Q units of corn using a production
function F(K,L). A production plan that uses K' = L' = 10 to produce Q' units of corn where
Q' < F(10, 10) is said to be
A) technically feasible and efficient.
B) technically unfeasible and efficient.
C) technically feasible and inefficient.
D) technically unfeasible and inefficient.
E) none of the above
Answer: C
Diff: 2
Section: 6.1
6) Which of the following inputs are variable in the long run?
A) labor.
B) capital and equipment.
C) plant size.
D) all of these.
Answer: D
Diff: 1
Section: 6.1
7) The short run is
A) less than a year.
B) three years.
C) however long it takes to produce the planned output.
D) a time period in which at least one input is fixed.
E) a time period in which at least one set of outputs has been decided upon.
Answer: D
Diff: 1
Section: 6.1
8) Joe owns a small coffee shop, and his production function is q = 3KL where q is total output in cups
per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour
(labor). If Joe's capital is currently fixed at K=3 machines, what is his short-run production function?
A) q = 3L
B) q = 3L2
C) q = 9L
D) q = 3K2
Answer: C
Diff: 1
Section: 6.1
2
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9) Suppose there are ten identical manufacturing firms that produce computer chips with machinery
(capital, K) and labor (L), and each firm has a production function of the form q = 10KL0.5. What is the
industry-level production function?
A) Q = 10K10L5
B) Q = 100KL0.5
C) Q = 100L0.5
D) none of the above
Answer: B
Diff: 1
Section: 6.1
10) For many firms, capital is the production input that is typically fixed in the short run. Which of the
following firms would face the longest time required to adjust its capital inputs?
A) Firm that makes DVD players.
B) Computer chip fabricator
C) Flat-screen TV manufacturer
D) Nuclear power plant
Answer: D
Diff: 2
Section: 6.1
11) We manufacturer automobiles given the production function q = 5KL where q is the number of
autos assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L
is the number of workers hired per hour (labor). If we use K=10 robots and L=10 workers in order to
produce q = 450 autos per shift, then we know that production is:
A) technologically efficient.
B) technologically inefficient.
C) maximized.
D) optimal.
Answer: B
Diff: 1
Section: 6.1
12) Some economists conduct empirical research on the theory of the firm by measuring the degree of
technical efficiency achieved by actual firms. What type of research contributions are provided by these
studies?
A) Normative
B) Positive
C) Administrative
D) Executive
Answer: B
Diff: 1
Section: 6.1
3
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13) Which of the following actions is not an example of the production coordination provided by firms?
A) Manage production activities of workers
B) Pay wages to workers
C) Establish industry safety regulations
D) Set the production schedule for each week
Answer: C
Diff: 2
Section: 6.1
14) Which of the following equations based on capital (K) and labor (L) inputs does not represent a
plausible production function?
A) F(K,L) = 3KL
B) F(K,L) = 3K
C) F(K,L) = K + L - 1
D) F(K,L) = 10(KL)0.5
Answer: C
Diff: 2
Section: 6.1
15) Ronald's Outboard Motor Manufacturing plant production function is y(K, L) = 25 . Ronald is
investigating a new outboard motor manufacturing technique. Ronald believes that if he adopts the new
technique, his production function for outboard motors will become: y(K, L) = 36 . Given that
Ronald uses 4 units of machine hours, sketch his production function with the old technique and the new
technique as he increases labor hours. With the new technique, do labor hours contribute more to
production?
Answer:
The slope of the new production function is steeper for all labor uses. This implies the marginal product
of labor is higher for the new technique. This means that labor hours are contributing at a higher rate for
the new technique.
Diff: 2
Section: 6.1
4
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Microeconomics, 8e (Pindyck/Rubinfeld)
Chapter 6 Production
6.1 Firms and Their Production Decisions
1) A production function defines the output that can be produced
A) at the lowest cost, given the inputs available.
B) for the average firm.
C) if the firm is technically efficient.
D) in a given time period if no additional inputs are hired.
E) as technology changes over time.
Answer: C
Diff: 2
Section: 6.1
2) A production function assumes a given
A) technology.
B) set of input prices.
C) ratio of input prices.
D) amount of capital and labor.
E) amount of output.
Answer: A
Diff: 1
Section: 6.1
3) A function that indicates the maximum output per unit of time that a firm can produce, for every
combination of inputs with a given technology, is called
A) an isoquant.
B) a production possibility curve.
C) a production function.
D) an isocost function.
Answer: C
Diff: 1
Section: 6.1
4) Use the following two statements to answer this question:
I. Production functions describe what is technically feasible when the firm operates efficiently.
II. The production function shows the least cost method of producing a given level of output.
A) Both I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) Both I and II are false.
Answer: B
Diff: 1
Section: 6.1
1
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5) A farmer uses L units of labor and K units of capital to produce Q units of corn using a production
function F(K,L). A production plan that uses K' = L' = 10 to produce Q' units of corn where
Q' < F(10, 10) is said to be
A) technically feasible and efficient.
B) technically unfeasible and efficient.
C) technically feasible and inefficient.
D) technically unfeasible and inefficient.
E) none of the above
Answer: C
Diff: 2
Section: 6.1
6) Which of the following inputs are variable in the long run?
A) labor.
B) capital and equipment.
C) plant size.
D) all of these.
Answer: D
Diff: 1
Section: 6.1
7) The short run is
A) less than a year.
B) three years.
C) however long it takes to produce the planned output.
D) a time period in which at least one input is fixed.
E) a time period in which at least one set of outputs has been decided upon.
Answer: D
Diff: 1
Section: 6.1
8) Joe owns a small coffee shop, and his production function is q = 3KL where q is total output in cups
per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour
(labor). If Joe's capital is currently fixed at K=3 machines, what is his short-run production function?
A) q = 3L
B) q = 3L2
C) q = 9L
D) q = 3K2
Answer: C
Diff: 1
Section: 6.1
2
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,Microeconomics, 8e (Pindyck, Rubinfeld)Microeconomics
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ch 6 10.pdf #$%$%$^$@**#&^#*&&%(%%^&*() 3 #$%$%$^$@**#&^#*&&%(%%^&*()
9) Suppose there are ten identical manufacturing firms that produce computer chips with machinery
(capital, K) and labor (L), and each firm has a production function of the form q = 10KL0.5. What is the
industry-level production function?
A) Q = 10K10L5
B) Q = 100KL0.5
C) Q = 100L0.5
D) none of the above
Answer: B
Diff: 1
Section: 6.1
10) For many firms, capital is the production input that is typically fixed in the short run. Which of the
following firms would face the longest time required to adjust its capital inputs?
A) Firm that makes DVD players.
B) Computer chip fabricator
C) Flat-screen TV manufacturer
D) Nuclear power plant
Answer: D
Diff: 2
Section: 6.1
11) We manufacturer automobiles given the production function q = 5KL where q is the number of
autos assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L
is the number of workers hired per hour (labor). If we use K=10 robots and L=10 workers in order to
produce q = 450 autos per shift, then we know that production is:
A) technologically efficient.
B) technologically inefficient.
C) maximized.
D) optimal.
Answer: B
Diff: 1
Section: 6.1
12) Some economists conduct empirical research on the theory of the firm by measuring the degree of
technical efficiency achieved by actual firms. What type of research contributions are provided by these
studies?
A) Normative
B) Positive
C) Administrative
D) Executive
Answer: B
Diff: 1
Section: 6.1
3
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13) Which of the following actions is not an example of the production coordination provided by firms?
A) Manage production activities of workers
B) Pay wages to workers
C) Establish industry safety regulations
D) Set the production schedule for each week
Answer: C
Diff: 2
Section: 6.1
14) Which of the following equations based on capital (K) and labor (L) inputs does not represent a
plausible production function?
A) F(K,L) = 3KL
B) F(K,L) = 3K
C) F(K,L) = K + L - 1
D) F(K,L) = 10(KL)0.5
Answer: C
Diff: 2
Section: 6.1
15) Ronald's Outboard Motor Manufacturing plant production function is y(K, L) = 25 . Ronald is
investigating a new outboard motor manufacturing technique. Ronald believes that if he adopts the new
technique, his production function for outboard motors will become: y(K, L) = 36 . Given that
Ronald uses 4 units of machine hours, sketch his production function with the old technique and the new
technique as he increases labor hours. With the new technique, do labor hours contribute more to
production?
Answer:
The slope of the new production function is steeper for all labor uses. This implies the marginal product
of labor is higher for the new technique. This means that labor hours are contributing at a higher rate for
the new technique.
Diff: 2
Section: 6.1
4
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