The production function for good X in the above table exhibits increasing marginal returns to capital over what output range?

# MCQs and Answers about Economics

### The average product of capital of producing 2,991 units of output (find point B) in the above table is

- 21.9

### The production function in the above table exhibits decreasing marginal returns to capital over what output range?

- Between 2,391 and 3,048

### The production function in the above table exhibits negative marginal returns to capital over what output range?

- Between 3,016 and 2,945

### The marginal product of capital of producing 2,991 units of output (find point A) in the above table is

- 26.7

### In the short run, the marginal cost curve crosses the average total cost curve at

- The minimum point of the average total cost curve

### Changes in the price of an input cause

- Slope changes in the isocost line

The point where diminishing marginal returns has begun to affect production, is best characterized by the point where the

- Marginal product curve begins to be negatively sloped

### The inputs that a manager uses to alter production are referred to as:

- Variable factors

### Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?

- The marginal product per dollar spent on all inputs is equal

Which of the following “costs” could a firm that wants to remain in business avoid if it halted current production?

- Variable costs

### If a firm’s production function is Leontief and the price of capital goes down the

- Cost minimizing combination of capital and labor does not change

### For the cost function C(Q) = 50 + 4Q + 2Q2, the total variable cost of producing 7 units of output is

- 126

### For the cost function C(Q) = 75 + 4Q + 2Q2, the marginal cost of producing 5 units of output is

- 24

Suppose the production function is given by Q = 4K + 6L. What is the average product of capital when 10 units of capital and 5 units of labor are employed?

- 7

Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?

- 5

Suppose the production function is Q = min {3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?

- 6

Suppose the marginal product of labor is 10 and the marginal product of capital is 8. If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use

- More capital and less labor

### Two firms producing identical products may merge due to the existence of:

- Economies of scale

### Larger firms can produce a product at lower average cost than small firms when

- Economies of scope exist

### Constant returns to scale exist when long-run average costs

- Remain constant as output is increased

### Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage, there exist

- Dis economies of scale