Exam2_Sample

# Exam2_Sample - Exam 2 Sample Instructor Bin Xie Spring 2015...

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Exam 2 Sample Instructor: Bin Xie Spring 2015 Multiple Choice Questions: 1. If the average productivity of labor equals the marginal productivity of labor, then (a) the average productivity of labor is at a maximum. (b) the marginal productivity of labor is decreasing. (c) the marginal productivity of labor is at a maximum. (d) Both A and B. (e) Both A and C. Explanation: check the graph of MP L , AP L . 2. If the marginal productivity of labor is constant for all levels of output, then the average pro- ductivity of labor 3. If marginal productivity is positive and increasing, then total product is 4. L-shaped isoquants imply that production requires that the inputs 1

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5. Isoquants that are downward-sloping straight lines exhibit (a) an increasing marginal rate of technical substitution. (b) a decreasing marginal rate of technical substitution. (c) a constant marginal rate of technical substitution. (d) a marginal rate of technical substitution that cannot be determined. Explanation: When isoquant is a straignt line, MRTS is a constant. 6. Let the production function be q = L a K b . The function exhibits decreasing returns to scale if 7. Returns to scale is a concept that operates
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