Quiz 4 - March 28 - WITH ANSWERS

# Quiz 4 - March 28 - WITH ANSWERS - ECO 304K: Introduction...

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ECO 304K: Introduction to Microeconomics Unique#: 33685 – Olivier Giovannoni Quiz #4 – March 28 1.Please pay attention when filling in the scantron ! 1.20 questions, 20 minutes. No going back to any  question. 1.Typically: the results and an answer sheet are posted  before the next class day, when  some of  the results will  be discussed.

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Question 1 The law of diminishing returns implies that, with the use of  capital fixed, as the use of labor rises,  A)   the TP of labor will fall below the marginal product of labor.  B)   total product will fall eventually.  C)   the production process will become technologically inefficient  eventually.  D)   the marginal product of labor will fall eventually.  Question 2 An increase in the quantity of fixed inputs shifts the average  total cost curve ________ if ________ exist.  A)   upward; constant returns to scale (9%)  B)   upward; economies of scale  C)   downward; economies of scale  D)   downward; diseconomies of scale  It’s in the book. When I use more inputs this will increase my costs. Now the problem is that at the same I can be on the downward portion of the LRAC curve and have economies of scale that would lower my cost. In that case (option B) we have upward and downward pressure on costs and the overall effect is unknown. With constant returns to scale, there is only one trend: costs are shifting up.
Question 3 When the marginal product curve is downward sloping, the  average product curve  A)   might be either upward or downward sloping (27%)  B)   must be upward sloping.  C)   must also be downward sloping.  D)   must be horizontal.  Question 4 With given input prices, increasing returns to scale are  present when the percentage increase in output ________.  A)   equals the percentage increase in all inputs  B)   is zero  C)   exceeds the percentage increase in all inputs (60%)

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## This note was uploaded on 11/01/2008 for the course ECON 304K taught by Professor Ledyard during the Spring '08 term at University of Texas.

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Quiz 4 - March 28 - WITH ANSWERS - ECO 304K: Introduction...

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