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Microeconomics 2nd Edition By Goolsbee – Test Bank

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  • ISBN-10 ‏ : ‎ 1464187029
  • ISBN-13 ‏ : ‎ 978-1464187025

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SKU:tb1002376

Microeconomics 2nd Edition By Goolsbee – Test Bank

Chapter 06

1. Production is an extremely complicated task, so economists make a number of simplifying assumptions. Which of the following assumptions do economists make in their basic model of producer behavior?

I. Multiproduct firms: All firms produce at least two goods.
II. Firms only use two inputs in the production process: capital and labor.
III. Cost minimization: Firms attempt to produce a fixed quantity of output at the lowest possible total cost.
IV. Firms can produce more output by using more inputs.

A) I and IV
B) I, II, III, and IV
C) II, III, and IV
D) I and III

2. A basic assumption of the short run is that a firm:
A) can employ more workers and add more capital to the production process.
B) cannot adjust its workforce or the amount of capital it uses.
C) can reduce the number of workers it uses, but it cannot adjust how much capital it uses.
D) can freely adjust the amount of labor and capital that it employs.

3. A basic assumption of the long run is that a firm:
A) cannot change the amount of labor or capital that it employs.
B) can change the amount of labor and capital that it employs.
C) can change the amount of capital that it employs but not the amount of labor.
D) cannot change the amount of capital that it employs but can change the amount of labor.

Use the following to answer question 4:

Table 6.1

Production Process 1 Production Process 2 Production Process 3
Units of
capital Units
of
labor Additional
output
produced Units
of
capital Units
of
labor Additional
output
produced Units
of
capital Units
of
labor Additional
output
produced
3 5 10 12 15 80 1 4 12
3 6 7 12 16 84 2 4 9
3 7 4 12 17 87 3 4 7

 

4. (Table 6.1) Diminishing marginal returns to labor occur in production process _____, and diminishing marginal returns to capital occur in production process _____.
A) 1; 3
B) 2; 1
C) 2; 3
D) 1; 1

5. A basic assumption of production is that the firm:
A) cannot borrow money to finance its input expenditures.
B) can buy as much labor and capital as it desires at fixed prices.
C) must bid up the prices of labor and capital in order to produce more output.
D) has a downward-sloping budget constraint.

6. Which of the following is a Cobb–Douglas production function?
A) Q = f(K, L)
B) Q = 5K + 2.5L
C) Q = K0.50L0.75
D) Q = 2K/3L

7. Which of the following is (are) example(s) of production functions?

I. Q = 56K + 18L
II. Q = 2K0.8L0.2
III. Q = KL

A) II and III
B) I, II, and III
C) II
D) I

8. A donut shop has a production function given by Q = 50K1/3L1/2, where Q is the number of donuts produced per hour, K is the number of donut fryers (which is fixed at eight in the short run), and L is the number of employed workers. How many donuts can be produced per hour with four workers in the short run?
A) 200
B) 167
C) 320
D) 84

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