Microeconomics Practice Test - 6: Theory of Production

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  1. When the TP falls

    1. the APLabor is zero

    2. the MPLabor is zero

    3. the APLabor is negative,

    4. the APLabor is declining

  2. When the APLabor is positive but declining, the MPLabor could be

    1. declining

    2. zero

    3. negative

    4. any of the above

  3. Stage II of production begins where the APLabor begins to decline

    1. Always

    2. never

    3. sometimes

    4. often

  4. When the MPLand is negative, we are in

    1. stage I for land

    2. stage III for labor

    3. stage II for land

    4. none of the above

  5. If, by increasing the quantity of labor used by one unit, the firm can give up 2 units of capital and still produce the same output, then the MRTSLK is

    1. 1/2

    2. 2

    3. 1

    4. 4

  6. If the MRTSLK equals 2, then the MPK/MPL is

    1. 2

    2. 1

    3. 1/2

    4. 4

  7. Within the relavant range, isoquants

    1. are negatively sloped

    2. are convex to the origin

    3. cannot cross

    4. are all of the above

  8. If we plot capital on the vertical axis and labor on the horizontal axis, the slope of a straight-line isocost drawn on such a graph is

    1. PL/PK

    2. PK/PL

    3. -PL/PK

    4. -PK/PL

  9. At the point of producer equilibrium

    1. the isoquant is tangent to the isocost

    2. the MRTSLK equals PL/PK

    3. MPL/PL = MPK/PK

    4. all of the above

  10. The expansion path of production theory is analogous in consumption theory to the

    1. price-consumption line

    2. Engle curve

    3. income-consumption line

    4. budget constraint line

  11. The elasticity of technical substitution is measured by

    1. the slope of the isoquant

    2. the change in the slope of the isoquant

    3. the ratio of factor inputs

    4. none of the above

  12. If we have constant returns to scale and we increase the quantity of labor used per unit of time by 10% but keep the amount of capital constant, output will

    1. increase by 10%

    2. decrease by 10%

    3. increase by more than 10%

    4. increase by less than 10%

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