Chapter Questions

Totalproductofcapital Assuming that output is a function of variable capital and fixed labor,this is the total output of a firm for a given level of labor input. Totalproductoflabor Assuming that output is a function of variable labor and fixed capital,this is the total output of a firm for a given level of labor input.

CHAPTER QUESTIONS

5.1What is the difference between a production function and a total product function? 5.2What is meant by the short run in production? 5.3What is meant by the long run in production? 5.4What is the total product of labor? What is the total product of capital? Are these short-run or long-run concepts? 5.5Suppose that output is a function of labor and capital.Assume that labor is the variable input and capital is the fixed input.Explain the law of diminishing marginal product.How is the law of diminishing marginal product reflected in the total product of labor curve? 5.6Assume that a production function exhibits the law of diminishing marginal product.What are the signs of the first and second partial derivatives of output with respect to variable labor input? 5.7Suppose that the total product of labor curve exhibits increasing, diminishing and negative marginal product.Describe in detail the shapes of the marginal product and average product curves. 5.8Suppose that the total product of labor curve exhibits only diminishing marginal product.Describe in detail the shapes of the marginal product and average product curves. 5.9Explain the difference between the law of diminishing marginal product and decreasing returns to scale. 5.10Suppose that output is a function of labor and capital.Define the output elasticity of variable labor input.Define the output elasticity of variable capital input.What is the sum of the output elasticity of variable labor and variable capital input? 5.11Suppose that a firm’s production function is Q = 75K0.4L0.7.What is the value of the output elasticity of labor? What is the value of the output elasticity of capital? Does this firm’s production function exhibit constant, increasing,or decreasing returns to scale? 5.12Define “marginal rate of technical substitution.” 5.13Suppose that output is a function of labor and capital.Diagrammatically,what is the marginal rate of technical substitution? 5.14Explain the difference between perfect and imperfect substitutability of factors of production.

5.15What does an “L-shaped”isoquant illustrate? Can you give an example of a production process that would exhibit an “L-shaped”isoquant? 5.16What does a linear isoquant illustrate? 5.17Isoquants cannot intersect.Do you agree? Explain. 5.18The degree of convexity of an isoquant determines the degree of substitutability of factors of production.Do you agree? Explain. 5.19Suppose that output is a function of capital and labor input.Assume that the production function exhibits imperfect substitutability between the factors of production.What,if anything,can you say about the values of the first and second derivatives of the isoquant? 5.20Suppose that a firm’s production function is Q = KL-1.Does this production function exhibit increasing,decreasing,or constant returns to scale? Explain. 5.21Define each of the following: a.Stage I of production b.Stage II of production c.Stage III of production 5.22When the average product of labor is equal to the marginal product of labor,the marginal product of labor is maximized.Do you agree? Explain. 5.23Suppose that output is a function of labor and capital input.The slope of an isoquant is equal to the ratio of the marginal products of capital and labor.Do you agree? Explain. 5.24Suppose that output is a function of labor and capital input.If a firm decides to reduce the amount of capital employed,how much labor should be hired to maintain a given level of output? 5.25What is the ratio of the marginal product of labor to the average product of labor? 5.26Isoquants may be concave with respect to the origin.Do you agree? Explain. 5.27Firms operate in the short run and plan in the long run.Do you agree? Explain. 5.28Describe at least three desirable properties of Cobb–Douglas production functions. 5.29What is the relationship between the average product of labor and the marginal product of labor? 5.30What is the coefficient of output elasticity? 5.31Suppose that output is a function of labor and capital input. Suppose further that the corresponding isoquant is linear.These conditions indicate that labor and capital are not substitutable for each other.Do you agree? Explain. 5.32Suppose that output is a function of labor and capital input. Suppose further that capital and labor must be combined in fixed propor-