Econ 315 Exam 2 Study Guide CSUF
Questions and All Correct Answers
(2025-2026) Update.
If a firm's production is Leontief and the wage rate goes up... - Answer Cost minimizing
combination of capital and labor does NOT change
The production function for a competitive firm is Q=K^.5L^.5. THe firm sells its output at a price
of $10 and can hire labor at a wage of $5. Capital is fixed at 25 units. The profit maximizing
quanitiy of labor is - Answer 25
The feasible means of converting raw inputs as steal, labor, and machinery into an output are
summarized by - Answer Technology
Total product begins to fall when - Answer Marginal product is zero
The combinations of inputs that product a given level of output are depicted by - Answer
isoquants
Isoquants are normally drawn with a convex shape because - Answer Inputs are not perfectly
substitutable
The absolute value of the slope of the isoquant is the - Answer marginal rate of technical
substitution
The production function is Q=K^.6L^.4. The margional rate of technical substitution is - Answer
2/3KL^-1
The Leontief production implies - Answer L shaped isoquants
Which curve(s) does the margional cost curve intersect at the (their) minimum point? - Answer
average total cost curve and average variable cost curve
What is implied when the total cost of producing Q1 and Q2 together is less than the total cost
, b)-4Q2+8Q1
c)6Q1Q2-Q1
d)4Q2Q1+8Q1 - Answer a) -4Q1Q2+8Q1
The minimum average cost of producing alternate levels of output, allowing for optimal
selection of all variiables of production is defined by the - Answer Long-run average total cost
curve
The long-run is defined as - Answer The horizon in which the manager can adjust all factors of
production
As the usage of an input increases, margiinal product - Answer Initially increases, then begins
to decline
A firm is operating at the production function, then workers - Answer must be putting forth
maximum effort
With a linear production function there is a - Answer perfect substitutable relationship
between all inputs
What does an isocost line represent? - Answer The combinations of K and L that cost the firm
the same amount of money
For given inputs prices, isocosts farther from the origin are associated with - Answer higher
costs
Cost complementarity exists in a multi-product cost function when - Answer the margional
cost of producing one output is reduced when the output of another product is increased
Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage,
there exists - Answer diseconomies of scales
Constant returns to scale exists when long-run average costs - Answer remain constant as
output is increased
Questions and All Correct Answers
(2025-2026) Update.
If a firm's production is Leontief and the wage rate goes up... - Answer Cost minimizing
combination of capital and labor does NOT change
The production function for a competitive firm is Q=K^.5L^.5. THe firm sells its output at a price
of $10 and can hire labor at a wage of $5. Capital is fixed at 25 units. The profit maximizing
quanitiy of labor is - Answer 25
The feasible means of converting raw inputs as steal, labor, and machinery into an output are
summarized by - Answer Technology
Total product begins to fall when - Answer Marginal product is zero
The combinations of inputs that product a given level of output are depicted by - Answer
isoquants
Isoquants are normally drawn with a convex shape because - Answer Inputs are not perfectly
substitutable
The absolute value of the slope of the isoquant is the - Answer marginal rate of technical
substitution
The production function is Q=K^.6L^.4. The margional rate of technical substitution is - Answer
2/3KL^-1
The Leontief production implies - Answer L shaped isoquants
Which curve(s) does the margional cost curve intersect at the (their) minimum point? - Answer
average total cost curve and average variable cost curve
What is implied when the total cost of producing Q1 and Q2 together is less than the total cost
, b)-4Q2+8Q1
c)6Q1Q2-Q1
d)4Q2Q1+8Q1 - Answer a) -4Q1Q2+8Q1
The minimum average cost of producing alternate levels of output, allowing for optimal
selection of all variiables of production is defined by the - Answer Long-run average total cost
curve
The long-run is defined as - Answer The horizon in which the manager can adjust all factors of
production
As the usage of an input increases, margiinal product - Answer Initially increases, then begins
to decline
A firm is operating at the production function, then workers - Answer must be putting forth
maximum effort
With a linear production function there is a - Answer perfect substitutable relationship
between all inputs
What does an isocost line represent? - Answer The combinations of K and L that cost the firm
the same amount of money
For given inputs prices, isocosts farther from the origin are associated with - Answer higher
costs
Cost complementarity exists in a multi-product cost function when - Answer the margional
cost of producing one output is reduced when the output of another product is increased
Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage,
there exists - Answer diseconomies of scales
Constant returns to scale exists when long-run average costs - Answer remain constant as
output is increased
