Question : 27) The slope of a typical isoquant negative because to : 1387772

27) The slope of a typical isoquant is negative because to produce a given output, a producer

A) will use more of one input only if it uses more of another.

B) can use less of one input only if the productivity of that input increases

C) can use less of one input only if it uses more of another.

D) will use more of one input only if the price of that input falls.

28) The marginal rate of technical substitution is measured by

A) the slope of the isoquant.

B) the relative input prices.

C) the slope of the isocost line.

D) the ratio of the product’s price to the product’s cost of production.

29) The slope of an isocost line ________ and equals the negative of ________.

A) increases as we move down the line; the ratio of input prices

B) decreases as we move down the line; the ratio of the marginal products

C) is constant; the ratio of input prices

D) is constant; the ratio of the marginal products

30) As a firm moves to higher isocost lines,

A) its profits increase.

B) its revenue increases.

C) its input price ratio increases.

D) its total cost increases.

31) An isocost line shows

A) combinations of two inputs that result in the same total cost for a firm.

B) combinations of two inputs that result in the same total output for a firm.

C) combinations of the two inputs that result in the same profit for a firm.

D) the different levels of total cost that result from various combinations of two inputs.

32) Suppose the price of capital and labor remain constant. As a firm’s expenditures for capital and labor increase, its isocost line

A) shifts out parallel to the original isocost line.

B) shifts in parallel to the original isocost line.

C) rotates outward on the Y-intercept.

D) rotates outward on the X-intercept.

33) On an isoquant/isocost graph, the least cost input combination of producing a given output is

A) any point on the isoquant curve.

B) any point on the isocost curve.

C) given by the tangency between the isoquant curve and the isocost line.

D) one of the intercept values on the graph.

Figure 11-16

34) Refer to Figure 11-16.  The figure above illustrates a series of isoquants. Which of the following statements is true?

A) Points x, z, and y all represent the same output.

B) Points z and y represent the same output; this output is produced with more capital at z than at y.

C) Point x and y represent the same output, but the cost of production at y is greater than the cost of production at x.

D) Point z represents a greater output than point x or point y.

35) A change in the slope of an isocost line is due to a change in

A) the output price.

B) the price of one or both inputs.

C) total cost.

D) quantity of output.

36) Consider a firm that uses two inputs, labor and capital, to produce its output. Assume labor is measured on the horizontal axis and capital on the vertical axis. Which of the following best explains why the marginal rate of technical substitution decreases in absolute value as we move down an isoquant?

A) The law of diminishing returns: for a given decline in capital, decreasing amounts of labor are required to produce the same level of output.

B) The law of increasing marginal opportunity cost: if a firm uses less and less capital it must use more and more labor, which drives up the cost of labor.

C) The law of diminishing returns: for a given decline in capital, increasing amounts of labor are required to produce the same level of output.

D) The law of imperfect substitutability: labor and capital are not perfect substitutes; therefore, a firm must replace decreases in capital with increases in labor.