ECO 2023 Quiz 5 Study Guide Questions
and All Correct Answers 2026-2027
Updated
A basic characteristic of the short run for both a perfectly competitive firm and a monopolist is
that:
A. the firm does not have sufficient time to cut its rate of output to zero
B. the firm does not have sufficient time to vary the level of any of the inputs used in the
production process
C. there are barriers to entry that prevent new firms from entering the industry to compete for
customers
D. the firm does not have sufficient time to vary the level of all of the inputs used in the
production process - Answer D. the firm does not have sufficient time to vary the level of all of
the inputs used in the production process
From a long-run production function (e.g., Q = 4K + 2L or Q = K0.5L0.5), which of the following
may be determined?
i. the quantity of output resulting from all combinations of inputs (e.g., capital and labor)
ii. the combination of inputs (e.g., capital and labor) that maximizes output
iii. the different combinations of inputs (e.g., capital and labor) that yield the same quantity of
output
iv. the cost to produce a given quantity of output
A. i
B. ii
C. iii
, D. iv
E. i and ii
F. i and iii
G. i, ii, and iii
H. i, ii, iii, and iv - Answer F. i. the quantity of output resulting from all combinations of inputs
(e.g., capital and labor)
and
iii. the different combinations of inputs (e.g., capital and labor) that yield the same quantity of
output
The law of diminishing marginal product (or returns) states that:
A. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will increase at an increasing rate
B. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will increase at a decreasing rate
C. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will decrease at a decreasing rate
D. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will decrease at an increasing rate - Answer B. as more and
more of a variable input, such as labor, is employed to a short-run production process, beyond a
point output will increase at a decreasing rate
Consider a firms per-period (e.g., hourly) production process. If it employs 1 unit of labor, then 4
units of output will be produced; if it employs 2 units of labor, then 10 units of output will be
produced; and if it employs 3 units of labor, then 18 units of output will be produced. It follows
that:
A. total output is increasing at an increasing rate and the marginal product of labor is decreasing
and All Correct Answers 2026-2027
Updated
A basic characteristic of the short run for both a perfectly competitive firm and a monopolist is
that:
A. the firm does not have sufficient time to cut its rate of output to zero
B. the firm does not have sufficient time to vary the level of any of the inputs used in the
production process
C. there are barriers to entry that prevent new firms from entering the industry to compete for
customers
D. the firm does not have sufficient time to vary the level of all of the inputs used in the
production process - Answer D. the firm does not have sufficient time to vary the level of all of
the inputs used in the production process
From a long-run production function (e.g., Q = 4K + 2L or Q = K0.5L0.5), which of the following
may be determined?
i. the quantity of output resulting from all combinations of inputs (e.g., capital and labor)
ii. the combination of inputs (e.g., capital and labor) that maximizes output
iii. the different combinations of inputs (e.g., capital and labor) that yield the same quantity of
output
iv. the cost to produce a given quantity of output
A. i
B. ii
C. iii
, D. iv
E. i and ii
F. i and iii
G. i, ii, and iii
H. i, ii, iii, and iv - Answer F. i. the quantity of output resulting from all combinations of inputs
(e.g., capital and labor)
and
iii. the different combinations of inputs (e.g., capital and labor) that yield the same quantity of
output
The law of diminishing marginal product (or returns) states that:
A. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will increase at an increasing rate
B. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will increase at a decreasing rate
C. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will decrease at a decreasing rate
D. as more and more of a variable input, such as labor, is employed to a short-run production
process, beyond a point output will decrease at an increasing rate - Answer B. as more and
more of a variable input, such as labor, is employed to a short-run production process, beyond a
point output will increase at a decreasing rate
Consider a firms per-period (e.g., hourly) production process. If it employs 1 unit of labor, then 4
units of output will be produced; if it employs 2 units of labor, then 10 units of output will be
produced; and if it employs 3 units of labor, then 18 units of output will be produced. It follows
that:
A. total output is increasing at an increasing rate and the marginal product of labor is decreasing
