ECON 300 Exam 2 QUESTIONS AND
CORRECT ANSWERS WITH COMPLETE
SOLUTION | NEW 2026 UPDATE
In the short run, the slope of the production function is equal to - ANSWERS
the marginal product of labor
in the short run, the marginal product of labor - ANSWERS begins to decrease
eventually.
Capital cannot be adjusted in the short run because - ANSWERS There is not
sufficient time to adjust it
The length of a short run is - ANSWERS Variable across industries
In the long run, because firms can adjust capital as well as labor: - ANSWERS
The impact of diminishing marginal returns is lessened
The firms goal is to: - ANSWERS 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: - ANSWERS 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 - ANSWERS Substitutes for firm 1 and complements for firm 2
If labor and capital are perfect substitutes in production: - ANSWERS Isoquants
are straight lines
If labor and capital are perfect complements in production: - ANSWERS
Isoquants are L shaped right angles
If a firms isocost line has a slope that is less than -1: - ANSWERS The wage rate
is greater than the rental rate of capital
The slope of isocost lines is constant because of the assumption that: -
ANSWERS The firm can buy as much capital or labor as it wants at fixed prices
If the wage rate increases: - ANSWERS The slope of an isocost line becomes
steeper and the isocost line rotates clockwise
If the rental rate of capital decreases: - ANSWERS 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: -
ANSWERS 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
CORRECT ANSWERS WITH COMPLETE
SOLUTION | NEW 2026 UPDATE
In the short run, the slope of the production function is equal to - ANSWERS
the marginal product of labor
in the short run, the marginal product of labor - ANSWERS begins to decrease
eventually.
Capital cannot be adjusted in the short run because - ANSWERS There is not
sufficient time to adjust it
The length of a short run is - ANSWERS Variable across industries
In the long run, because firms can adjust capital as well as labor: - ANSWERS
The impact of diminishing marginal returns is lessened
The firms goal is to: - ANSWERS 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: - ANSWERS 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 - ANSWERS Substitutes for firm 1 and complements for firm 2
If labor and capital are perfect substitutes in production: - ANSWERS Isoquants
are straight lines
If labor and capital are perfect complements in production: - ANSWERS
Isoquants are L shaped right angles
If a firms isocost line has a slope that is less than -1: - ANSWERS The wage rate
is greater than the rental rate of capital
The slope of isocost lines is constant because of the assumption that: -
ANSWERS The firm can buy as much capital or labor as it wants at fixed prices
If the wage rate increases: - ANSWERS The slope of an isocost line becomes
steeper and the isocost line rotates clockwise
If the rental rate of capital decreases: - ANSWERS 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: -
ANSWERS 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
