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Micro-Problem Set 1

The document contains a practice problem set with 10 multiple choice questions related to microeconomics topics including short run production, production functions, marginal product, average product, and the law of diminishing returns.

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Cihan Ali Kesen
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23 views

Micro-Problem Set 1

The document contains a practice problem set with 10 multiple choice questions related to microeconomics topics including short run production, production functions, marginal product, average product, and the law of diminishing returns.

Uploaded by

Cihan Ali Kesen
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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MICROECONOMICS-II

PROBLEM SET 1
CHAPTER 6

1) 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.

2) Joe owns a small coffee shop, and his production function is q = 3KL where q is total output in cups per
hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour
(labor). If Joe's capital is currently fixed at K=3 machines, what is his short-run production function?
A) q = 3L
B) q = 3L2
C) q = 9L
D) q = 3K2

3) Suppose there are ten identical manufacturing firms that produce computer chips with machinery
(capital, K) and labor (L), and each firm has a production function of the form q = 10KL0.5. What is the
industry-level production function?
A) Q = 10K10L5
B) Q = 100KL0.5
C) Q = 100L0.5
D) none of the above

4) We manufacturer 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.

5) The marginal product of an input is:


A) total product divided by the amount of the input used to produce this amount of output.
B) the addition to total output that adds nothing to total revenue.
C) the addition to total output that adds nothing to profit.
D) the addition to total output due to the addition of one unit of all other inputs.
E) the addition to total output due to the addition of the last unit of an input, holding all other inputs constant

6) 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.
7) According to the law of diminishing returns:
A) the total product of an input will eventually be negative.
B) the total product of an input will eventually decline.
C) the marginal product of an input will eventually be negative.
D) the marginal product of an input will eventually decline.
8) Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is
eighteen,
A) marginal product is rising.
B) marginal product is falling.
C) average product is rising.
D) average product is falling.

9) Which would not increase the productivity of labor?


A) An increase in the size of the labor force
B) An increase in the quality of capital
C) An increase in the quantity of capital
D) An increase in technology
E) An increase in the efficiency of energy

10) If we take the production function and hold the level of output constant, allowing the amounts of
capital and labor to vary, the curve that is traced out is called:
A) the total product.
B) an isoquant.
C) the average product.
D) the marginal product.

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