Final Exam AGEC 230 questions and
answers A+ rated
An isoquant is defined as the: - correct answer ✔✔combinations of inputs required to produce
a constant quantity of output.
The slope of an isoquant is: - correct answer ✔✔the marginal rate of technical substitution.
The slope of an isocost line for any two inputs is the ratio of the prices of the inputs - correct
answer ✔✔True
A line connecting the points of tangency between successive isoquants and isocost lines is
known as a firm's: - correct answer ✔✔Expansion path
Which of the following is true about the short run: - correct answer ✔✔In the short run, some
inputs are fixed while others are variable
The law of diminishing marginal returns states that: - correct answer ✔✔as additional units of
inputs are used, marginal physical product (MPP) will eventually decline.
The Average Physical Product (APP) curve intersects the Marginal Physical Product (MPP) curve
when the APP is at its: - correct answer ✔✔Maximum
The point of tangency between an isocost curve and an isoquant indicates - correct answer
✔✔The minimum cost of using these two inputs for a given level of output
If two inputs are perfect substitutes, their MRTS is: - correct answer ✔✔a constant.
, An isocost line is defined by: - correct answer ✔✔combinations of inputs required to incur
constant cost.
Consider the following two statements:
1. An isoquant curve shows different combinations of two inputs that will all produce the same
output.
2. The slope of the isoquant equals the ratio of the two inputs. - correct answer ✔✔Statement 1
is true, statement 2 is false
At the optimal combination of two inputs (and assuming the firm produces using a typical
production function) - correct answer ✔✔a and b only.
a. the slopes of the isoquant and isocost curves are equal.
b. the marginal rate of technical substitution equals the ratio of input prices of the two inputs.
Stage III of production is characterized by - correct answer ✔✔Negative Marginal Physical
Product
Which of the following is true about the long run : - correct answer ✔✔In the long run, all
inputs are variable
If a firm uses all its resources and technology to produce two products-cream and cheese, then
the figure above represents the firm's: - correct answer ✔✔Product possibilities frontier
Which of the following statement(s) is/are true about point A,
1. Point A lies outside the firm's Production Possibilities Frontier
answers A+ rated
An isoquant is defined as the: - correct answer ✔✔combinations of inputs required to produce
a constant quantity of output.
The slope of an isoquant is: - correct answer ✔✔the marginal rate of technical substitution.
The slope of an isocost line for any two inputs is the ratio of the prices of the inputs - correct
answer ✔✔True
A line connecting the points of tangency between successive isoquants and isocost lines is
known as a firm's: - correct answer ✔✔Expansion path
Which of the following is true about the short run: - correct answer ✔✔In the short run, some
inputs are fixed while others are variable
The law of diminishing marginal returns states that: - correct answer ✔✔as additional units of
inputs are used, marginal physical product (MPP) will eventually decline.
The Average Physical Product (APP) curve intersects the Marginal Physical Product (MPP) curve
when the APP is at its: - correct answer ✔✔Maximum
The point of tangency between an isocost curve and an isoquant indicates - correct answer
✔✔The minimum cost of using these two inputs for a given level of output
If two inputs are perfect substitutes, their MRTS is: - correct answer ✔✔a constant.
, An isocost line is defined by: - correct answer ✔✔combinations of inputs required to incur
constant cost.
Consider the following two statements:
1. An isoquant curve shows different combinations of two inputs that will all produce the same
output.
2. The slope of the isoquant equals the ratio of the two inputs. - correct answer ✔✔Statement 1
is true, statement 2 is false
At the optimal combination of two inputs (and assuming the firm produces using a typical
production function) - correct answer ✔✔a and b only.
a. the slopes of the isoquant and isocost curves are equal.
b. the marginal rate of technical substitution equals the ratio of input prices of the two inputs.
Stage III of production is characterized by - correct answer ✔✔Negative Marginal Physical
Product
Which of the following is true about the long run : - correct answer ✔✔In the long run, all
inputs are variable
If a firm uses all its resources and technology to produce two products-cream and cheese, then
the figure above represents the firm's: - correct answer ✔✔Product possibilities frontier
Which of the following statement(s) is/are true about point A,
1. Point A lies outside the firm's Production Possibilities Frontier
