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Exercises Chapter 6 Production
1) Which of the following inputs are variable in the long run?
A) Labor
B) Capital and equipment
C) Plant size
D) all of these
2) The short run is:
A) less than a year.
B) three years.
C) however long it takes to produce the planned output.
D) a time period in which at least one input is fixed.
E) a time period in which at least one set of outputs has been decided upon.
3) We manufacture automobiles given the production function q = 5KL where q is the number of autos
assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L is the
number of workers hired per hour (labor). If we use K = 10 robots and L = 10 workers in order to produce
q = 450 autos per shift, then we know that production is:
A) technologically efficient.
B) technologically inefficient.
C) maximized.
D) optimal.
4) The slope of the total product curve is the:
A) average product.
B) slope of a line from the origin to the point.
C) marginal product.
D) marginal rate of technical substitution.
5) When the average product is decreasing, marginal product:
A) equals average product.
B) is increasing.
C) exceeds average product.
D) is decreasing.
E) is less than average product.
6) Marginal product crosses the horizontal axis (is equal to zero) at the point where:
A) average product is maximized.
B) total product is maximized.
C) diminishing returns set in.
D) output per worker reaches a maximum.
E) All of the above are true.
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7) What describes the graphical relationship between average product and marginal product?
A) Average product cuts marginal product from above, at the maximum point of marginal product.
B) Average product cuts marginal product from below, at the maximum point of marginal product.
C) Marginal product cuts average product from above, at the maximum point of average product.
D) Marginal product cuts average product from below, at the maximum point of average product.
E) Average and marginal product do not intersect.
8) You operate a car detailing business with a fixed amount of machinery (capital), but you have recently
altered the number of workers that you employ per hour. Three employees can generate an average
product of 4 cars per person in each hour, and five employees can generate an average product of 3 cars
per person in each hour. What is the marginal product of labor as you increase the labor from three to
five employees?
A) MP = 3 cars
B) MP = 1.5 cars
C) MP = 15 cars
D) MP = -1 cars
9) Complete the following table:
10) The production function for Cogswell Cogs is K represents the number of robot
hours used in the production process while L represents the number of labor hours. The marginal
productivity of a labor hour is Fill in the empty columns in the table below. Use the
information in the table to sketch Cogswell's marginal product of labor curve while robot hours are fixed
at 9.
Output Robot Hours Labor Hours
MPL =
9 8
9 27
9 64
9 125
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11) Trisha's Fashion Boutique production function for dresses is y(K, L) = , where K is the
number of sewing machines and L is the amount of labor hours employed. Trisha pays $15 per labor
hour and sells each dress for $87.50. Also, Trisha currently has 4 sewing machines. Fill in the table
below. How many units of labor will Trisha employ before the value of the marginal product of labor is
less than the cost of a labor hour?
y L $87.50(MPL)
MPL =
1
20
40
60
80
12) As we move downward along a typical isoquant, the slope of the isoquant:
A) becomes flatter.
B) becomes steeper.
C) remains constant.
D) becomes linear.
13) The marginal rate of technical substitution is equal to the:
A) slope of the total product curve.
B) change in output minus the change in labor.
C) change in output divided by the change in labor.
D) ratio of the marginal products of the inputs.
14) A production function in which the inputs are perfectly substitutable would have isoquants that are:
A) convex to the origin.
B) L-shaped.
C) linear.
D) concave to the origin.
15) A firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one
unit of labor, but does not want its output quantity to change, the firm should:
A) use five fewer units of capital.
B) use 0.8 fewer units of capital.
C) use 1.25 fewer units of capital.
D) add 1.25 units of capital.
16) A construction company builds roads with machinery (capital, K) and labor (L). If we plot the
isoquants for the production function so that labor is on the horizontal axis, then a point on the isoquant
with a small MRTS (in absolute value) is associated with high ________ use and low ________ use.
A) labor, capital
B) capital, labor
C) concrete, gravel
D) none of the above
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Figure 6.4.1
17) Refer to Figure 6.4.1 above. According to the diagram below, where each isoquant's output level is
marked to the right of the isoquant, production is characterized by:
A) decreasing returns to scale.
B) constant returns to scale.
C) increasing returns to scale.
D) increasing, constant and decreasing returns to scale.
18) A farmer uses M units of machinery and L hours of labor to produce C tons of corn, with the
following production function This production function exhibits:
A) decreasing returns to scale for all output levels.
B) constant returns to scale for all output levels.
C) increasing returns to scale for all output levels.
D) no clear pattern of returns to scale.
19) Does it make sense to consider the returns to scale of a production function in the short run?
A) Yes, this is an important short-run characteristic of production functions.
B) Yes, returns to scale determine the diminishing marginal returns of the inputs.
C) No, returns to scale is a property of the consumer's utility function.
D) No, we cannot change all of the production inputs in the short run.
