ECON 300 Exam 2 Questions With
Correct Answers
In |the |short |run, |the |slope |of |the |production |function |is |equal |to |- |CORRECT |ANSWER✔✔-the |
marginal |product |of |labor
in |the |short |run, |the |marginal |product |of |labor |- |CORRECT |ANSWER✔✔-begins |to |decrease |
eventually.
Capital |cannot |be |adjusted |in |the |short |run |because |- |CORRECT |ANSWER✔✔-There |is |not |
sufficient |time |to |adjust |it
The |length |of |a |short |run |is |- |CORRECT |ANSWER✔✔-Variable |across |industries
In |the |long |run, |because |firms |can |adjust |capital |as |well |as |labor: |- |CORRECT |ANSWER✔✔-The
|impact |of |diminishing |marginal |returns |is |lessened
The |firms |goal |is |to: |- |CORRECT |ANSWER✔✔-Minimize |the |cost |of |producing |whatever |
quantity |it |has |chosen
If |labor |is |measured |on |the |horizontal |axis, |if |capital |is |measured |on |the |vertical |axis |and |if |
bundle |A |contains |less |labor |than |bundle |B |and |they |are |on |the |same |isoquant: |- |CORRECT |
ANSWER✔✔-The |marginal |rate |of |technical |substitution |(MRTS) |is |higher |at |bundle |A |than |at |
bundle |B
, Two |firms |use |capital |and |labor |to |produce |their |good. |Firm |1's |isoquant |is |relatively |straight |
while |firm |2's |isoquants |are |sharply |curved. |Capital |and |labor |are |- |CORRECT |ANSWER✔✔-
Substitutes |for |firm |1 |and |complements |for |firm |2
If |labor |and |capital |are |perfect |substitutes |in |production: |- |CORRECT |ANSWER✔✔-Isoquants |
are |straight |lines
If |labor |and |capital |are |perfect |complements |in |production: |- |CORRECT |ANSWER✔✔-Isoquants
|are |L |shaped |right |angles
If |a |firms |isocost |line |has |a |slope |that |is |less |than |-1: |- |CORRECT |ANSWER✔✔-The |wage |rate |is
|greater |than |the |rental |rate |of |capital
The |slope |of |isocost |lines |is |constant |because |of |the |assumption |that: |- |CORRECT |
ANSWER✔✔-The |firm |can |buy |as |much |capital |or |labor |as |it |wants |at |fixed |prices
If |the |wage |rate |increases: |- |CORRECT |ANSWER✔✔-The |slope |of |an |isocost |line |becomes |
steeper |and |the |isocost |line |rotates |clockwise
If |the |rental |rate |of |capital |decreases: |- |CORRECT |ANSWER✔✔-The |slope |of |an |isocost |line |
becomes |steeper |and |the |isocost |line |rotates |clockwise
If |a |firm |is |employing |one |unit |each |of |capital |and |labor |to |produce |one |unit |of |output |and |
the |firm's |production |exhibits |increasing |returns |to |scale: |- |CORRECT |ANSWER✔✔-The |input |
bundle |of |two |units |of |labor |and |two |units |of |capital |will |be |above |the |isoquant |containing |all |
bundles |that |result |in |two |units |of |output
The |production |function |Q= |K0.75L0.75: |- |CORRECT |ANSWER✔✔-Exhibits |increasing |return |to |
scale
Correct Answers
In |the |short |run, |the |slope |of |the |production |function |is |equal |to |- |CORRECT |ANSWER✔✔-the |
marginal |product |of |labor
in |the |short |run, |the |marginal |product |of |labor |- |CORRECT |ANSWER✔✔-begins |to |decrease |
eventually.
Capital |cannot |be |adjusted |in |the |short |run |because |- |CORRECT |ANSWER✔✔-There |is |not |
sufficient |time |to |adjust |it
The |length |of |a |short |run |is |- |CORRECT |ANSWER✔✔-Variable |across |industries
In |the |long |run, |because |firms |can |adjust |capital |as |well |as |labor: |- |CORRECT |ANSWER✔✔-The
|impact |of |diminishing |marginal |returns |is |lessened
The |firms |goal |is |to: |- |CORRECT |ANSWER✔✔-Minimize |the |cost |of |producing |whatever |
quantity |it |has |chosen
If |labor |is |measured |on |the |horizontal |axis, |if |capital |is |measured |on |the |vertical |axis |and |if |
bundle |A |contains |less |labor |than |bundle |B |and |they |are |on |the |same |isoquant: |- |CORRECT |
ANSWER✔✔-The |marginal |rate |of |technical |substitution |(MRTS) |is |higher |at |bundle |A |than |at |
bundle |B
, Two |firms |use |capital |and |labor |to |produce |their |good. |Firm |1's |isoquant |is |relatively |straight |
while |firm |2's |isoquants |are |sharply |curved. |Capital |and |labor |are |- |CORRECT |ANSWER✔✔-
Substitutes |for |firm |1 |and |complements |for |firm |2
If |labor |and |capital |are |perfect |substitutes |in |production: |- |CORRECT |ANSWER✔✔-Isoquants |
are |straight |lines
If |labor |and |capital |are |perfect |complements |in |production: |- |CORRECT |ANSWER✔✔-Isoquants
|are |L |shaped |right |angles
If |a |firms |isocost |line |has |a |slope |that |is |less |than |-1: |- |CORRECT |ANSWER✔✔-The |wage |rate |is
|greater |than |the |rental |rate |of |capital
The |slope |of |isocost |lines |is |constant |because |of |the |assumption |that: |- |CORRECT |
ANSWER✔✔-The |firm |can |buy |as |much |capital |or |labor |as |it |wants |at |fixed |prices
If |the |wage |rate |increases: |- |CORRECT |ANSWER✔✔-The |slope |of |an |isocost |line |becomes |
steeper |and |the |isocost |line |rotates |clockwise
If |the |rental |rate |of |capital |decreases: |- |CORRECT |ANSWER✔✔-The |slope |of |an |isocost |line |
becomes |steeper |and |the |isocost |line |rotates |clockwise
If |a |firm |is |employing |one |unit |each |of |capital |and |labor |to |produce |one |unit |of |output |and |
the |firm's |production |exhibits |increasing |returns |to |scale: |- |CORRECT |ANSWER✔✔-The |input |
bundle |of |two |units |of |labor |and |two |units |of |capital |will |be |above |the |isoquant |containing |all |
bundles |that |result |in |two |units |of |output
The |production |function |Q= |K0.75L0.75: |- |CORRECT |ANSWER✔✔-Exhibits |increasing |return |to |
scale
