In describing a given production technology, the short run is best defined as lasting

The correct answer: as long as at least one input is fixed.

There is no set calendar time for the short run. Its length can vary with technology from firm to firm. As long as at least one input is fixed, the firm is in the short run.

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The production function is a relationship between a given combination of inputs and

The correct answer: the highest resulting level of output.

The production function shows the highest level of output produced by a given combination of inputs, with a given technology.

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Suppose the short-run production function at Skip's Pottery can be represented as Q = 100L – L2 where Q is clay pots produced per week and L is the number of hours Skip works per week. If Skip works 40 hours per week, what is his marginal product of labor?

The correct answer: 20

MPL = change in Q/change in L = 100 – 2L. When L =40, MPL = 20.

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Suppose the short-run production function at Skip's Pottery can be represented as Q = 100L – L2 where Q is clay pots produced per week and L is the number of hours Skip works per week. If Skip works 40 hours per week, what is his average product of labor?

The correct answer: 60

APL = Q/L. When L = 40, Q = 4000 – 1600 =2400. APL = 2400/40 = 60.

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Thomas Malthus' prediction would have come true if

The correct answer: technological changes in food production had not taken place.

Malthus' prediction was based on the law of diminshing marginal productivity that states that as labor increases, total output increases at a decreasing rate, all other things constant. Malthus' prediction failed to account for the fact that technological change would increase the marginal product of labor.

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If the marginal product of labor is below the average product of labor, it must be true that

Your answer: the marginal product of labor is negative.

The correct answer: the average product of labor is falling.

Incorrect. Marginal product of labor is the extra output produced by the next unit of labor. If the next unit produces at a rate below the average, the average will be pulled down. The marginal product of labor can still be positive even if it is below the average.

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The average product of labor is maximized when the marginal product of labor

The correct answer: equals the average product of labor.

At this point, APL is still rising.

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As one moves along a convex isoquant, which of the following does not change?

The correct answer: The level output produced.

An isoquant shows the combinations of capital and labor that produce the same level of output. If the isoquant is convex, then the MRTS diminishes as labor increases.

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If the isoquants for two different types of inputs are negatively sloped straight lines, then

The correct answer: the two inputs are perfect substitutes for one another.

If the isoquants have a constant slope, then the one input can always be substituted for the other at the same rate no matter how much of each input is used. The two inputs are, therefore, perfect substitutes.

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A certain trench-digging company utilizes the following technology: Each man has a shovel and digs. A man without a shovel is useless, and shovels, of course, cannot dig on their own. The isoquants for this company are

The correct answer: L shaped.

From a fixed proportion of one to one, additional shovels have zero marginal product and additional labor has zero marginal product. The isoquants are, therefore, L shaped.

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For the production function, Q = L1/3 K1/3, what shape will the isoquants have?

The correct answer: negatively sloped and convex.

MPL = 1/3(L-2/3 K1/3) = 1/3(Q/L). MPK = 1/3(L1/3 K-2/3) = 1/3(Q/K). The slope of the isoquant equals –(MPL/MPK) = -K/L. As L increases and K decreases, the slope becomes smaller (in absolute terms). Thus, the isoquants are negatively sloped and convex.

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The production function, Q = L1/3 K1/3, exhibits

The correct answer: decreasing returns to scale at all levels of production.

Suppose initially L = L1 and K = K1 and Q = Q1. Now increase both inputs by the same factor 2. The new level of output equals 2L11/3 2K11/3= 22/3 L11/3 K11/3 = 22/3Q1. Thus, while inputs were doubled, the increase in output is less than double. This is true for all levels of L1 and K1. Thus, there are decreasing returns to scale at all levels of production.

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Labor is measured on the horizontal axis, and capital is measured on the vertical axis. If an isoquant is relatively flat at a certain combination of capital and labor, we know that

The correct answer: the marginal product of labor is less than the marginal product of capital.

Since the slope equals –MPL/MPK, a relatively flat isoquant means that MPL is less than MPK.

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