Econ+100-+Practice+exercises+for+Midtem+II+Fall+2011-+no+ANS

Econ+100-+Practice+exercises+for+Midtem+II+Fall+2011-+no+ANS...

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UCI- Practice Exercises for Midterm II Econ 100 – Prof El Hag Fall 2011 Multiple Choice Questions 1) When the average product is decreasing, marginal product A) equals average product. B) is increasing. C) exceeds average product. D) is decreasing. E) is less than average product. Figure 6.1 2) Refer to Figure 6.1. At point A, the marginal product of labor is A) rising. B) at its minimum. C) at its maximum. D) diminishing. 3) Refer to Figure 6.1. At which point on the total product curve is the average product of labor the highest? A) point A. B) point B. C) point C. D) point D. E) none of the above
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4) Refer to Figure 6.1. Which of the following statements is false? A) At point E the marginal product of labor is decreasing. B) At point E the marginal product of labor is negative. C) At point E the average product of labor is decreasing. D) At point E the average product of labor is negative. E) At point E the marginal product of labor is less than the average product of labor. 5) Joe owns a coffee house and produces coffee drinks under the production function q = 5KL where q is the number of cups generated per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). What is the average product of labor? A) AP = 5 B) AP = 5K C) AP = 5L D) AP = 5K/L 6) Joe owns a coffee house and produces coffee drinks under the production function q = 5KL where q is the number of cups generated per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). What is the marginal product of labor? A) MP = 5 B) MP = 5K C) MP = 5L D) MP = 5K/L 7) A firm's marginal product of labor is 4 and its marginal product of capital is 5. If the firm adds one unit of labor, but does not want its output quantity to change, the firm should A) use five fewer units of capital. B) use 0.8 fewer units of capital. C) use 1.25 fewer units of capital. D) add 1.25 units of capital. 8) An L-shaped isoquant A) is impossible. B) would indicate that the firm could switch from one output to another costlessly. C) would indicate that the firm could not switch from one output to another. D) would indicate that capital and labor cannot be substituted for each other in production. E) would indicate that capital and labor are perfect substitutes in production.
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9) In a production process, all inputs are increased by 10%; but output increases less than 10%. This means that the firm experiences A) decreasing returns to scale. B) constant returns to scale. C) increasing returns to scale. D) negative returns to scale. 10) Which of the following production functions exhibits constant returns to scale? A) q = KL B) q = KL 0.5 C) q = K + L D) q = log(KL) 11) Complete the following table: 12) Which of the following statements correctly uses the concept of opportunity cost in decision making? I.
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This note was uploaded on 12/13/2011 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

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Econ+100-+Practice+exercises+for+Midtem+II+Fall+2011-+no+ANS...

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