Firm Behavior and Production Quiz

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What does the production function, q = (K,L), show the relationship between?

Output and inputs (correct)

Inputs and prices

Inputs and technology

Output and technology

What is marginal product?

The rate at which one input can be substituted for another

The maximum amount of output a firm can produce

The ratio of labor to capital in the production process

The additional output produced by adding one more unit of input, holding other inputs constant (correct)

What does an isoquant show?

Possible input combinations that a firm can use to produce a given level of output (correct)

The relationship between input prices and output levels

The impact of taxes on production

The technology used in production

What does the absolute value of the isoquant's slope represent?

The rate at which one input can be substituted for another Signup and view all the answers

How does the rate of technical substitution (RTS) change as a firm uses more and more of one input?

It decreases Signup and view all the answers

With technological progress, what happens to the isoquant?

It shifts outwards indicating increased production Signup and view all the answers

What does the term 'marginal product' refer to?

The additional output that can be produced by adding one more unit of some input Signup and view all the answers

In a production function, what does q = f( K, L ) represent?

The mathematical relationship between inputs and outputs Signup and view all the answers

What determines the slope of an isoquant?

The marginal rate of technical substitution (RTS) Signup and view all the answers

How does a firm increase output according to the text?

By increasing the number of inputs Signup and view all the answers

What happens to production as a result of technological change?

Production increases without affecting inputs Signup and view all the answers

What term describes the ability of a firm to substitute one input for another?

RTS (marginal rate of technical substitution) Signup and view all the answers

What is a shift in the production function that allows a given output level to be produced using fewer inputs?

Technological progress Signup and view all the answers

In economic terms, what does RTS typically stand for?

Return to Scale Signup and view all the answers

In a production function, what does 'q = 10 x (KL) ½' represent?

A numerical example of production Signup and view all the answers

How can you define isoquant in the context of production?

A curve showing all combinations of inputs that produce the same level of output Signup and view all the answers

What is the economic concept that describes the additional output gained by employing one more unit of input?

Marginal product Signup and view all the answers

Which term refers to the relationship between changes in all inputs and the resulting proportional change in output?

Return to scale Signup and view all the answers