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Economics 2150A/B

Chapter 3 Inputs and Production Functions Multiple Choice 1. Which of the following is a correct definition? a. Inputs are defined as a set of productive resources that can be transformed by production into outputs. b. Outputs are defined as a set of goods and services that are produced and may be purchased by consumers or used as inputs by other firms. c. The production function is defined as the maximum possible output that can be attained by the firm for any given quantity of inputs. d. If a firm is attaining the maximum possible output from its inputs, a firm is producing in a technically efficient way. e. All of the above 2. An inputs requirement function represents: a) the set of feasible levels of inputs that will produce a given level of output. b) The various recipes for producing a given level of output. c) The minimum amount of an input necessary to produce a given level of output. d) The set of all feasible combinations of inputs and outputs. 3. Which of the following is incorrect? a) The total product increases, when the marginal product is positive. b) The average magnitude increases when the marginal product is greater than the average product. c) The total product decreases when the marginal magnitude is positive, but close to zero. d) The average product stays the same only if the marginal product is equal to the average product. 4. You are given the following information about two points A and B that lie on the same isoquant: MRTS AL,K= 5 K /L = 5 MRTS BL,K= 10 K /L = 10 What is the elasticity of substitution as we move along an isoquant from point A towards point B? a. 10 b. 5 c. 1/2 d. 1 5. The production function Q = 25(K L M ) exhibits a. decreasing returns to scale b. constant returns to scale c. increasing returns to scale. 6. An isoquant represents: a) all combinations of inputs that produce a given level of output at the same cost. b) All combinations of inputs that are just sufficient to produce a given level of output. c) All combinations of output that require the same levels of inputs. d) All combinations of inputs that cost the same amount. 1/2 7. For the1/2oduction function Q = (KL) , the equation of a typical isoquant is: a) K = L Q b) KL = Q 1/2 2 c) K = Q L2 d) K = Q /L 8. Which of the following is true? a) MRTS L,K= -ΔK/ΔL for a constant level of output. b) MRTS L,Kis the negative of the slope of the isoquant. c) MRTS L,K= MP /LP K d) All of the above 9. With a fixed proportions production function, the isoquants a) have a diminishing marginal rate of technical substitution. b) Are straight lines. c) Are L-shaped d) Have a constant marginal rate of technical substi
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