2/11/25, 7:16 PM Assignment Print View

1. Award: 10.00 points

The short-run production function typically

 is the collection of employee hours and capital that yield the same level of output.

 shows the relationship between the level of output produced and the number of employee
hours hired, all else being equal.

 shows the relationship between the level of output produced and the amount of capital
employed, all else being equal.

 specifies how much output is produced by any combination of labor and capital.

 All of these answers are correct.

References

Multiple Choice Difficulty: 01 Easy

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2/11/25, 7:16 PM Assignment Print View

2. Award: 10.00 points

The marginal product of labor

 initially increases with the quantity of labor because of specialization.

 diminishes after the inflection point on the total product curve.

 is the slope of the short-run production function.

 eventually diminishes as the capital stock is fixed.

 All of these answers are correct.

References

Multiple Choice Difficulty: 02 Medium

3. Award: 10.00 points

In the short run, the demand for labor for a competitive firm is

 the marginal product of the labor curve.

 the value of the marginal product of the labor curve.

 the downward-sloping portion of the marginal product curve.

 perfectly elastic at the market wage.

 All of these answers are correct.

References

Multiple Choice Difficulty: 01 Easy

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2/11/25, 7:16 PM Assignment Print View

4. Award: 10.00 points

What is the marginal productivity condition of a profit-maximizing firm?

 The firm should produce up to the point where the cost of producing an additional unit of
output is equal to the revenue from selling an additional unit of output.

 The firm should produce up to the point where it produces the amount of capital demanded.

 The firm should hire all workers willing to work at the minimum wage.

 The firm should produce as much as necessary in order to maximize revenue.

 The firm should produce up to the point where the marginal cost of hiring an additional unit of
labor equals the cost of selling one more unit of output.

References

Multiple Choice Difficulty: 02 Medium

5. Award: 10.00 points

The cost of producing a given level of output is minimized

 on the inelastic portion of the long-run product demand curve.

 where the ratio of input prices equals the marginal rate of technical substitution.

 where the wage rate equals the slope of the isoquant.

 where the ratio of input prices equals the slope of the isocost.

 when the wage rate equals the price of capital.

References

Multiple Choice Difficulty: 02 Medium

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2/11/25, 7:16 PM Assignment Print View

6. Award: 10.00 points

What is not true when thinking of the firm's objective as a cost-minimization problem rather than as a
profit-maximization problem?

 The slope at any point on any isoquant reveals the marginal rate of technical substitution.

 The firm chooses to employ either labor or capital, depending on which factor is cheaper.

 The firm chooses a particular level of output to produce.

 The price of the output good does not enter the decision of how much labor or capital to
employ once the total amount of output to produce has been determined.

 The firm will choose labor and capital inputs so that the marginal productivity of labor relative
to the marginal productivity of capital equals the price of labor relative to the price of capital.

References

Multiple Choice Difficulty: 02 Medium

7. Award: 10.00 points

Ally owns a shoe store. The market wage is $10 per hour and the cost of capital is $2 per week for each
unit of capital rented. Consider the isocost line associated with spending $8000 per week, and let the
y-axis be the amount of capital rented. Which of the following is not true?

 If Ally rents no capital she can employ 800 hours of work.

 If Ally employs no workers she can rent 4000 units of capital.

 If Ally employs 600 hours of work she can rent 1000 units of capital.

 If Ally employs 400 hours of work she can rent 3000 units of capital.

 The slope of the isocost line is -5.

References

Multiple Choice Difficulty: 03 Hard

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2/11/25, 7:16 PM Assignment Print View

8. Award: 10.00 points

What is an example of the substitution effect?

 Workers choose to provide more hours of labor when the wage rate decreases.

 More labor is hired as long as the marginal product of labor is positive.

 The firm expands output when production costs fall.

 The firm expands output when production costs increase.

 The firm hires more labor when the wage falls because labor has become relatively cheaper
compared to the price of other factors of production.

References

Multiple Choice Difficulty: 01 Easy

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