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practice exam 2 solutions

# practice exam 2 solutions - University of Illinois at...

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1 University of Illinois at Urbana-Champaign ECON302 Intermediate Microeconomics Exam 2 Solutions PART I: Multiple Choice Questions (50 points) 1. Identify the truthfulness of the following statements. I. When the marginal product of labor is falling, the average product of labor is falling. II. When the marginal product curve lies above the average product curve, then average product is rising. a) Both I and II are true. b) Both I and II are false. c) I is true; II is false. d) I is false; II is true. Ans: D K=0 K=1 K=2 K=3 K=4 L=0 0 0 0 0 0 L=1 0 1 2 3 4 L=2 0 8 16 24 32 L=3 0 27 54 81 108 L=4 0 64 128 192 256 Table 1 2. Refer to the table 1. Holding labor constant, what do you notice about the marginal productivity of capital?

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2 3. An isoquant represents 4. When a production function can be expressed as ( )( ) Q aK bL , the relationship between capital and labor in the production function is that 5. Identify the true statement. a) Decreasing returns to scale and diminishing marginal returns are just two different ways of saying the same thing. b) Returns to scale pertains to the impact on output of increasing all inputs simultaneously; diminishing marginal returns pertains to the impact of changing a single input while holding all other inputs constant. c) Returns to scale pertains to the impact on output of changing a single input while holding all other inputs constant; diminishing marginal returns pertains to the impact on output of increasing all inputs simultaneously. d) Returns to scale can be identified by calculating the slope of an isoquant. Ans: B
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practice exam 2 solutions - University of Illinois at...

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