Homework 2
Name: ______________________
ECO 303 Spring 2008
ID: _________________________
Multiple Choices (30pt)
1.
Suppose every unit of output requires two units of labor (L) or four units of capital
(K).
The production function for this process is
a)
Q = 0.5L+0.25K
b)
Q = 2L+4K
c)
Q = min(2L,4K)
d)
Q = min(0.5L, 0.25K)
Use the following graph to answer question 2 and 3
2.
Marginal product reaches a maximum when labor equals
a)
200
b)
400
c)
600
d)
800
3.
Average product reaches a maximum when labor equals
a)
400
b)
600
c)
800
d)
1000
4.
With a linear production function, the
MRTS
L, K
a)
declines as the firm substitutes labor for capital.
b)
remains constant as the firm substitutes labor for capital.
c)
implies upwardsloping, straightline isoquants.
d)
is undefined.
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Suppose over time that a firm’s production process incurs capitalsaving
technological progress.
This implies
a)
the isoquants corresponding to any particular level of output will shift outward
from the origin and the
MRTS
L, K
along any ray from the origin will increase.
b)
the isoquants corresponding to any particular level of output will shift outward
from the origin and the
MRTS
L, K
along any ray from the origin will decrease.
c)
the isoquants corresponding to any particular level of output will shift inward
toward the origin and the
MRTS
L, K
along any ray from the origin will increase.
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 Spring '08
 YunShanChan
 Economics, Microeconomics, Economics of production

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