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TBChap005 - Chapter 05 Business-Level Strategy Multiple...

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Chapter 05 Business-Level Strategy Multiple Choice Questions 1. Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should use: A. more capital and less labor. B. more labor and less capital. C. three times more capital than labor. D. none of the answers are correct. 2. Suppose the production function is Q = min{K, 2L}. How much output is produced when 4 units of labor and 9 units of capital are employed? 3. Suppose the production function is given by Q = 3K + 4L. What is the average product of capital when 10 units of capital and 10 units of labor are employed? 4. Suppose the production function is given by Q = 3K + 4L. What is the marginal product of capital when 10 units of capital and 10 units of labor are employed? 5- 1 X
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5. Suppose the production function is given by Q = min{K, L}. How much output is produced when 10 units of labor and 9 units of capital are employed? A. 0 B. 4 C. 9 D. 1 3 6. Suppose the production function is given by Q = min{K, L}. How much output is produced when 4 units of labor and 9 units of capital are employed? 7. Suppose the production function is given by Q = 3K + 4L. What is the marginal product of capital when 5 units of capital and 10 units of labor are employed? 8. Suppose the production function is given by Q = 3K + 4L. What is the average product of capital when 5 units of capital and 10 units of labor are employed? 5- 2 X
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9. For the cost function C(Q) = 100 + 2Q + 3Q 2 , the marginal cost of producing 2 units of output is: A. 2 . B. 3 . C. 12 . D. 14 . 10. For the cost function C(Q) = 100 + 2Q + 3Q 2 , the average fixed cost of producing 2 units of output is: 11. For the cost function C(Q) = 100 + 2Q + 3Q 2 , the total variable cost of producing 2 units of output is: 12. If a firm's production function is Leontief and the wage rate goes up, the: 5- 3 X
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