HW4_Soln - Homework 4 Solution (Chapter 9) DUE : IN CLASS 6...

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Homework 4 Solution (Chapter 9) DUE : IN CLASS 6 th MARCH, 2009 (FRIDAY) ECON 80A Professor: Paroma Sanyal Microeconomic Theory 126 Sachar Bldg. Brandeis University (781) 736-2268 Spring 2009 psanyal@brandeis.edu Total 100 points Section 1: Multiple Choice Questions (2 points each) (20 points) 1. In a value added production function like the one used in the text, raw materials are A) counted as inputs in a production process. B) called intermediate goods. C) are counted in the final product of any production process as part of the value of output. D) described, in part, by all of the above. Answer: B / D 2. The nineteenth-century British economist Thomas Malthus argued that the law of diminishing returns implied that A) capital would increase relative to labor. B) technological change would grow at an increasing pace. C) eventual misery would befall the human race. D) raw materials would eventually run out. Answer: C 3. In the long run A) all inputs are fixed. C) all intermediate goods are fixed. B) only capital inputs are fixed. D) all inputs are variable. Answer: D 4. Diminishing returns begin to occur A) when the slope of the ray from the origin reaches a maximum. B) when the total product curve reaches a maximum. C) when the slope of the total product curve reaches a maximum. D) when the marginal product curve intersects the average product curve. Answer: C
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5. For any constant returns production function, the isoquants for Q = 1, Q = 2, Q = 3, etc. will A) all be inversely proportional to the inputs. B) exhibit diminishing returns in the long run. C) be straight lines. D) be equally spaced, i.e. the distance between Q = 1 and Q = 2 is the same as Q = 2 and Q = 3, etc. Answer: D 6. The general rule for allocating a productive resource efficiently across different production activities of the same product, like fishing boats in the text example, is to choose the allocation for which the A) average product of the resource is the same in every activity. B) marginal product of the resource is the same in every activity. C) total product of the resource is the same in every activity. D) average product is equal to the marginal product in every activity. Answer: B 7. The rate at which one input can be exchanged for another without altering output is called A) the slope of the total product curve. C) the slope of the marginal product of labor. B) the marginal rate of technical substitution. D) the law of diminishing returns of labor. Answer: B
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This note was uploaded on 10/15/2011 for the course ECON 82 taught by Professor Demsetz during the Spring '09 term at Brandeis.

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HW4_Soln - Homework 4 Solution (Chapter 9) DUE : IN CLASS 6...

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