CSUF ECON 315 Chap 5 Test Questions with All Solved Solutions () Update.

CSUF ECON 315 Chap 5 Test Questions
with All Solved Solutions (2025-2026)
Update.
Production Function - Answer Mathematical function that defines the maximum amount of
output that can be produced with a given set of inputs. Q= F(K,L)

- Q is the level of output

- K is the quantity of capital input

- L is the quantity of labor input



Short-run - Answer period of time where some factors of production(inputs) are FIXED, and
constrain a manager's decisions.



Long-run - Answer period of time over which all factors of prodcution(inputs) are variable, and
can be adjusted by manager.



Total Product(TP) - Answer Max level of output that can be produced with a given amount of
inputs



Average Product(AP) - Answer A measure of the output produced per unit of input

- average product of labor: Q/L

-average product of capital: Q/K



Marginal product(MP) - Answer the change in total product(output) attributable to the last
unit of an input.

- Marginal product of labor: ∆𝑄/∆𝐿

-Marginal product of capital: ∆𝑄/∆𝐾



What is the role of the manager in the production process - Answer -Produce output on the
production function

- aligning incentives to induce

maximum worker effort.

-Use the right mix of inputs to maximize profits.

, Value Marginal product - Answer value of the output produced by the last unit of an input.



law of diminishing returns - Answer the marginal product of an additional unit of output will at
some point be lower than the marginal product of the previous unit.



Profit-Maximization input usage - Answer to maximize profits, use input levels at which
marginal benefit equals marginal cost

- when the cost of each additional unit of labor is w, the manager should continue to employ
labor up to the point where VMP L = w in the range of diminishing marginal product



Linear production function - Answer assumes a perfect linear relationship between all inputs
and total output.



𝑄=𝐹(𝐾,𝐿)=𝑎𝐾+𝑏𝐿, where 𝑎 and 𝑏 are constants.



Leontief production function - Answer assumes inputs are used in fixed proportions.



𝑄=𝐹(𝐾,𝐿)=min⁡{𝑎𝐾,𝑏𝐿}, where 𝑎 and 𝑏 are constants.



Cobb-Douglas production function - Answer A production function that assumes some degree
of substitutability among inputs.



𝑄=𝐹(𝐾,𝐿)=𝐾^𝑎 𝐿^𝑏, where 𝑎 and 𝑏 are constants.



Linear measures of productivity - Answer Marginal products: 〖𝑀𝑃〗_𝐾=𝑎 and 〖𝑀𝑃〗_𝐿=𝑏




Average Prodcuts: 〖𝐴𝑃〗_𝐾=(𝑎𝐾+𝑏𝐿)/𝐾 and 〖𝐴𝑃〗_𝐿=(𝑎𝐾+𝑏𝐿)/𝐿



Cobb- Douglas measures of productivtiy - Answer Marginal prodcuts: 〖𝑀𝑃〗_𝐾=𝑎𝐾^(𝑎−1)
𝐿^𝑏 and 〖𝑀𝑃〗_𝐿=𝑏𝐾^𝑎 𝐿^(𝑏−1)