1. A production function a. tells you how inputs are affected by output b. tells
ID: 1094416 • Letter: 1
Question
1. A production function
a. tells you how inputs are affected by output
b. tells you how output varies as inputs vary
c. assumues that the sate of technology is given
d. b+c
e. none of the above
2. The short run for a company is
a. less than one year
b. more than one year but less than tree years
c. defined by calendar time elapsed
d. none of the above
3. In the production function: Q=2.6L.5 *k.4*M.1, returns to scale implied are:
a. 2.6 times the amount of inputs
b. increasing returns
c. a+b
d. None of the above
4. Given the production function: Q=6L2M2 -.10L3M3, where L=units of labor and M=units of material. How many units of L maximize Q, given M=10 is fixed?
a. L=360
b. L=4
c. L=3600
5. Given the production function in 4 above, the number of units of labor (L) that maximizes marginal product of labor given M=10 is
a. L=4
b. L=0
c. L=10
d. L=2
e. None of the above
6. A company should use all resources available to reduce the number of defects produced to zero.
True
False
7. The law of eventually diminishing marginal returns:
a. states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns.
b. is a mathematical theorem that can be logically proved or disproved
c. is the rate at which one input may be substituted for another input in the production process
d. None of the above
Explanation / Answer
Answers:
1. (D) b+c
2 (*B)
3. (C)
4. B L = 4
5. L=4
6. True
7. A states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns.
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