ECON 300 Exam 2 Study Questions
and Answers Graded A+ 2026
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
and Answers Graded A+ 2026
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
