Search
Home
Saved
0
327 views
Upload
Sign In
Join
RELATED TITLES
0
ECON-210 MidTermTest-2 AnsKey Fall 2011-1
Uploaded by Amina Bejos
Top Charts
Books
Audiobooks
Magazines
Midterm Answer Key for Intermediate Micro Economics. The course code is ECON- 210.
Save
Embed
Share
Print
Download
News
Documents
Sheet Music
1
of 4
Production Function
Production
Solutions Chapter 18
Search document
ECON-210 Intermediate Microeconomics Midterm Test No. 2 November 24, 2011
Section A: Definitions/Short Answers (4 questions at 5 points each for a total of 20 poin Instruction: Answer each of the following four questions in the space provided. A maximum sentences should be sufficient. Good penmanship would be appreciated.
1. Carefully define the term production function, and explain its importance. Answer:
A firm's production function is a quantitative relationship that indicates the max imum le of output the firm can produce for any an y combination of inputs. A production function is guide to management for efficient production of the good or service. Section: 5.1 Basic Production Concepts
2. Carefully explain why the marginal product of labor first rises and then falls as use of lab increases. In which portion of the marginal product of o f labor curve will the firm typically produce? Answer:
The marginal product of labor increases because with more labor, specialization can be exploited. In addition, any underutilized fixed factors can be used more intensively. Mar Read Free Forare 30this Days Sign up to vote on title product of labor then decreases as opportunities for specialization exhausted, and mo Useful Not useful and more labor is applied to a fixed amount of machines and production capacity. The ty Cancel anytime. Special offer for students: Only $4.99/month. firm will produce at an input level for which MPL MP L is falling.
Master your semester with Scribd & The New York Times
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
327 views
Sign In
Upload
Join
RELATED TITLES
0
ECON-210 MidTermTest-2 AnsKey Fall 2011-1
Uploaded by Amina Bejos
Top Charts
Books
Audiobooks
Magazines
Midterm Answer Key for Intermediate Micro Economics. The course code is ECON- 210.
Save
Embed
Share
Print
1
Download
News
Documents
Sheet Music
of 4
Production Function
Production
Solutions Chapter 18
Search document
Section B: Essay Questions (4 Questions @ 20 points each for a Total 80 points) Instruction: Answer ALL 4 of the following questions in this section. Explain and detail you answers VERY carefully. The QUALITY of your explanation determines your grade. Please separate sheet for each question. Good penmanship would be appreciated.
1. Suppose that a production function can be written Q = 9L2 – L3. Making a chart by plug in values to show the output, marginal product of labor and average product of labor as l varies from 0 to 9 units or graphing the function Q on the vertical axis and L on the horizontal axis, can you tell for what values of labor is the marginal product of labor risi constant, falling, and negative? At what value of L does the total product of labor reach maximum? Answer: By plugging values into this function, we obtain the following figures: L
Q
MPL
0
0
0
0
1
8
8
8
2
28
You're Reading 20 a Preview
14
3
54
Unlock full access with a free trial. 26
18
4
80
26 Free Trial Download With
20
Master your semester with Scribd 6 108 & The New York Times 5
7 Special offer for students: Only $4.99/month.
100
98
APL
20 8 -10
20
Read Free Foron 30this Days Sign up to vote title
18
Not useful Cancel anytime.
Useful
14
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
327 views
Sign In
Upload
Join
RELATED TITLES
0
ECON-210 MidTermTest-2 AnsKey Fall 2011-1
Uploaded by Amina Bejos
Top Charts
Books
Audiobooks
Magazines
Midterm Answer Key for Intermediate Micro Economics. The course code is ECON- 210.
Save
Embed
Share
Print
1
Download
News
Documents
Sheet Music
of 4
Production Function
Production
Solutions Chapter 18
Search document
positive, the total product would still be rising, whereas if it were negative, the total product would be falling. The only way for the total product to neither rise nor fall i the marginal product just to be zero. You can see that this occurs at approximately 6 units from the chart. Section: 6.2 Production Functions with a Single Input
2. a) A firm’s production function is given by Q = 2K 2 + 6L. Does this production function exhibits constant returns to scale? Answer:
At K = L = 1, we find that Q = 8. In turn, at K = L = 2, we now have Q = 18 (output mor than doubles). Therefore, this production function exhibits increasing returns to scale.
b) The average variable cost at Q = 1, Q = 2, Q = 3, Q = 4 is respectively equal to $5, $6 and $8 per unit. Find the marginal cost of the first four units of output. Answer: Q 1 2
You're Reading a Preview AVC VC Unlock full access with a free trial.
5
Download With Free 6 12Trial
3 7 Master your semester with Scribd 8 & The New York Times 4 Special offer for students: Only $4.99/month.
5
MC 5 7
21 9 Read Free Foron 30this Days Sign up to vote title 32 Useful 11Not useful Cancel anytime.
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
327 views
Upload
Sign In
Join
RELATED TITLES
0
ECON-210 MidTermTest-2 AnsKey Fall 2011-1
Uploaded by Amina Bejos
Top Charts
Books
Audiobooks
Magazines
Midterm Answer Key for Intermediate Micro Economics. The course code is ECON- 210.
Save
Embed
Share
Print
Download
News
Documents
Sheet Music
1
of 4
Production Function
Production
Solutions Chapter 18
Search document
b) We know that AVC = 6 + 2Q and MC = 6 + 4Q. Equating these implies Q = 0. SECTION: The Costs of Production
4. A firm’s production process uses labor, L, and capital, K , and materials, M , to produce an output, Q according to the function Q = KLM , where the marginal products of the three
inputs are MP L = KM , MP K = LM , and MP M = KL. The wage rate for labor is w = 2, the
rental rate of capital is r = 1, and the cost of materials is m = 4 per unit. Let materials in be fixed now at M = 2. What is the cost minimizing level of capital that the firm must produce a target level of output, Q = 1600?
Answer: 40 Bonus Question (10 points) NOTE: Your final mark for this test cannot exceed 100 points.
"The concept of returns to scale is useful in analyzing production but irrelevant in the analys You're Reading a Preview consumer behavior." Discuss. Unlock full access with a free trial.
Answer: Returns-to-scale refers to how much output increases when all inputs increase b y a partic Download With Free Trial amount. Formally, the returns-to-scale is the percentage increase in output obtained by a given percentage change in all inputs. Returns to scale may be decreasing, constant, or increasing depending on whether a 1% increase in inputs results in a less than, equal, or Read Free For 30 Days Sign up to vote on this title greater percentage increase in output. Since this concept refers to a change in all inputs useful it is really a long-run description of production. Graphically, if we move from one isoqu Useful Not Cancel anytime. to another isoquant corresponding to double the level of all inputs, we want to know wh Special offer for students: Only $4.99/month. that isoquant is labeled with a production level that is less than, equal, or greater than the
Master your semester with Scribd & The New York Times
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
