Introduction to Microeconomics - Quiz Dec. 7, 2023

Consider the table. To produce 105 units of output, there are how several combinations of K and L, which are the combinations?

• 3 units of K and 5 units of L

  OR

  5 units of K and 3 units of L

• 3 units of L and 5 units of K

  OR

  5 units of L and 3 units of K

• 3 units of K and 5 units of L

  OR

  5 units of K and 5 units of L

Isoquant curve shows all possible combinations of inputs that yield the same level output. Which statement below is WRONG?

• The production level at point B is the same as at point A

• The production level at point B is higher than at point A

• The production level at D is higher than at point B

Isoquant curve shows all possible combinations of inputs that yield the same level output. Why is the quantity of output produced at point A equal to the quantity of output at point B.?

• Because A and B have the same combinations of inputs

• Because there is a possible substitution of inputs between A and B

• Because A and B give the producer the same level of utility

A set of isoquants, or isoquant map, describes the firm’s production function. Which of the following statements is WRONG?

• At points A, B, and C, the quantity of output is different

• Points A and D represent the same level of output

• Production at point E is different from production at point C

Consider the isoquant map. To produce 75 units of output, the producer has to use the following combination of inputs.

• 2 units of capital and 3 units of labor

• 3 units of capital and 3 units of labor

• 1 units of capital and 3 units of labor

In the short run, capital can be fixed at the same amount. For example, the amount of capital fixed at 10, then with more labor input, a producer....

• can reach a higher Isoquant

• can produce more capital

• can reach a higher profit

The marginal rate of technical substitution (MRTS) tells us about what?

• The amount of one input that can be reduced when one additional unit of another input is used, so that the same units of output is produced.

• The amount of K that can be increased when one additional unit of L is used, so that the same q is produced.

• The amount of L that can be reduced when one additional unit of K is used, so that output can be increased.

When a producer increases the use of each input by 5%, the output increases by 7%. The situation is called....

• increasing returns to scale

• constant returns to scale

• decreasing returns to scale

What is accounting cost?   

• The actual amount of money a producer spends for production plus depreciation charges for capital equipment.

• The actual expenses plus interest for borrowing capital

• The actual expenses a producer spends for production, i.e. labor cost and capital cost.

What is economic cost?

• The cost to a producer of using economic resources in production, not including opportunity cost.

• The cost to a producer of using economic resources in production, including opportunity cost.

• The cost to a producer of using all inputs in production, not including opportunity cost.