WEEK

8 Quiz answes

Question 1

What will happen to output if a firm with constant returns to scale increases the
use of all inputs to production by 10%?

Select one:
a. It rises by less than 10%
b. It rises by more than 10%
c. Can't Say
d. It rises by exactly 10%



Question 2

A firm produces output with capital and labour. It doubles its use of labour and
output rises by 50%. What does this information tell us about the returns to
scale in the production function?

Select one:
a. The firm has increasing returns to scale
b. Nothing
c. The firm has constant returns to scale
d. The firm has decreasing returns to scale



Question 3

If two inputs into production are perfect substitutes, will the isoquants?
Select one:
a. Be a straight line
b. Be a Curved Line
c. Be a right angle


Question 4
Suppose there are two isoquants, A and B. Isoquant B is twice as far from the
origin as isoquant A and corresponds to a level of output more than twice as high
as Isoquant B. Does the firm have?
Select one:
a. Constant Returns
b. Increasing Returns
c. Decreasing Returns
d. Can't Say

Question 5

The following Table gives total labour supply to a monopsonist for different
wages a firm might pay:

Wage

Labour Supply

Total Cost of Labour
4


1
6


2
8


3
10

4

What numbers should go in the final column?

Select one:
a. 4,6,8,10
b. 1,2,3,4
c. 4,12,24,40
d. 4,3,8/3,2.5

Question 6

The following Table gives total labour supply to a monopsonist for different
wages a firm might pay (this is the same as the previous question) :
Wage

Labour Supply


4


1
6


2
8


3
10

4

What is the marginal cost of labour in going from 2 to 3 workers?
Answer: 12



Question 7
The following Table gives total labour supply to a monopsonist for different
wages a firm might pay (this is the same as the previous question) :
Wage

Labour Supply


4


1
6


2
8


3
10

4


If the marginal revenue product of a worker is 10 what will be the profit
maximizing level of employment for the monopsonist?

Answer: 2


Question 8

The following Table gives total labour supply to a monopsonist for different
wages a firm might pay (this is the same as the previous question) :
Wage

Labour Supply


4


1
6


2
8


3
10

4


If the marginal revenue product of a worker is 10 what will be the profit
maximizing level of the wage for the monopsonist?

Answer: 6



Question 9

The following Table gives total labour supply to a monopsonist for different
wages a firm might pay (this is the same as the previous question) :
Wage

Labour Supply


4


1
6


2
8


3
10

4

If the marginal revenue product of a worker is 10 and the government imposes
a minimum wage of 9 what level of employment will the firm choose?
Answer: 3



Question 10

The following Table gives total labour supply to a monopsonist for different
wages a firm might pay (this is the same as the previous question) :
Wage

Labour Supply


4


1
6


2
8


3
10

4

If the marginal revenue product of a worker is 10 and the government imposes
a minimum wage of 11 what level of employment will the firm choose?
Answer: 0