Microeconomics: Production Functions
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Questions and Answers

What does an isoquant map describe?

  • A production function (correct)
  • A demand function
  • A cost function
  • A supply function

    • What do negatively sloped isoquants show?

  • The rigidity of output levels
  • The uncertainty of production
  • The flexibility of production decisions (correct)
  • The inflexibility of production decisions

    • What happens to output when moving from one isoquant to another?

  • It increases (correct)
  • It becomes zero
  • It remains constant
  • It decreases

    • What shape are the isoquants in a fixed-proportions production function?

    <p>L-shaped</p> Signup and view all the answers

    What is a characteristic of a production function with L-shaped isoquants?

    <p>Fixed-proportions</p> Signup and view all the answers

    What is the output level at point A and D?

    <p>55 units per year</p> Signup and view all the answers

    What is the implication of having L-shaped isoquants in a production function?

    <p>Only one combination of labor and capital can produce each level of output</p> Signup and view all the answers

    What type of production function is associated with L-shaped isoquants?

    <p>Leontief production function</p> Signup and view all the answers

    What is the output level at point B?

    <p>75 units per year</p> Signup and view all the answers

    What is the implication of having a fixed-proportions production function on the use of labor and capital?

    <p>Labor and capital must be used in a fixed ratio</p> Signup and view all the answers

    What is the output level at points C and E?

    <p>90 units per year</p> Signup and view all the answers

    What is the primary characteristic of the MRTS at all points on an isoquant?

    <p>It is constant</p> Signup and view all the answers

    What can be inferred about the production process if an isoquant represents a particular output level?

    <p>The production process can be either labor-intensive or capital-intensive</p> Signup and view all the answers

    What does a point on an isoquant represent?

    <p>A specific combination of labor and capital</p> Signup and view all the answers

    What is the significance of points A, B, and C on the isoquant?

    <p>They represent different combinations of labor and capital that produce the same level of output</p> Signup and view all the answers

    What is the implication of a firm being at point A on the isoquant?

    <p>The firm is highly capital-intensive</p> Signup and view all the answers

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