PROBLEM
SET
2
Due
MONDAY
October
24
,
before
class
Name___________________________________
MULTIPLE
CHOICE.
Choose
the
one
alternative
that
best
completes
the
statement
or
answers
the
question.
1) Writing
total
output
as
Q,
change
in
output
as
△
Q,
total
labor
employment
as
L,
and
change
in
labor
employment
as
△
L,
the
marginal
product
of
labor
can
be
written
algebraically
as
A) Q
/
L.
B)
Δ
Q
/
Δ
L.
C)
Δ
L
/
Δ
Q.
D)
Δ
Q
∙
L.
1)
2) When
the
average
product
is
decreasing,
marginal
product
A) is
decreasing.
B) equals
average
product.
C) exceeds
average
product.
D) is
less
than
average
product.
E) is
increasing.
2)
3) Use
the
following
two
statements
to
answer
this
question:
I.
The
marginal
product
of
labor
is
the
slope
of
the
line
from
the
origin
to
the
total
product
curve
at
that
level
of
labor
usage.
II
The
average
product
of
labor
is
the
slope
of
the
line
that
is
tangent
to
the
total
product
curve
at
that
level
of
labor
usage.
A) Both
I
and
II
are
true.
B) Both
I
and
II
are
false.
C) I
is
false,
and
II
is
true.
D) I
is
true,
and
II
is
false.
3)
4) If
we
take
the
production
function
and
hold
the
level
of
output
constant,
allowing
the
amounts
of
capital
and
labor
to
vary,
the
curve
that
is
traced
out
is
called:
A) the
total
product.
B) an
isoquant.
C) the
marginal
product.
D) the
average
product.
E) none
of
the
above
4)
5) Suppose
there
are
ten
identical
manufacturing
Frms
that
produce
computer
chips
with
machinery
(capital,
K)
and
labor
(L),
and
each
Frm
has
a
production
function
of
the
form
q
=
10KL
0.5
.
What
is
the
industry

level
production
function?
A) Q
=
100L
0.5
B) Q
=
100KL
0.5
C) Q
=
10K
10
L
5
D) none
of
the
above
5)
6) If
the
isoquants
are
straight
lines,
then
A) the
marginal
rate
of
technical
substitution
of
inputs
is
constant.
B) inputs
have
Fxed
costs
at
all
use
rates.
C) only
one
combination
of
inputs
is
possible.
D) there
are
constant
returns
to
scale.
6)
1
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View Full Document7) Use
the
following
two
statements
to
answer
this
question:
I.
"Decreasing
returns
to
scale"
and
"diminishing
returns
to
a
factor
of
production"
are
two
phrases
that
mean
the
same
thing.
II
Diminishing
returns
to
all
factors
of
production
implies
decreasing
returns
to
scale.
A) I
is
true,
and
II
is
false.
B) Both
I
and
II
are
false.
C) I
is
false,
and
II
is
true.
D) Both
I
and
II
are
true.
7)
8) Use
the
following
two
statements
to
answer
this
question:
I.
The
average
total
cost
of
a
given
level
of
output
is
the
slope
of
the
line
from
the
origin
to
the
total
cost
curve
at
that
level
of
output.
II.
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 '07
 Cheng
 Marginal product, Average cost

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