Quiz Exam 3

Question 1

An isoquant curve shows

• all combinations of two inputs that will produce a given amount of profit.
• the amount of output that can be produced from a given amount of input.
• all combinations of two outputs that can be produced from a given amount of input.
• all combinations of two inputs that will produce a given amount of output.

Answer 1

• All combinations of two inputs that will produce a given amount of output.

Question 2

The combination of feed ingredients in a least-cost feed ration depends on all the following except

• substitution rates between the ingredients available.
• relative prices of the ingredients available.
• selling price of the livestock.
• the nutritional requirements of the livestock.

Answer 2

• selling price of the livestock.

Question 3

A production possibility curve shows

• all combinations of two outputs which can be produced from a fixed amount of input.
• various amounts of output which can be obtained from different amounts of a variable input.
• a fixed amount of profit that is possible from producing different combinations of two outputs.
• all combinations of two inputs which will produce a fixed amount of output

Answer 3

• all combinations of two outputs which can be produced from a fixed amount of input.

Question 4

As the slope of an isoquant decreases, the substitution ratio increases. (T/F/)

Answer 4

• FALSE

Question 5

Over time, changes in technology can change the substitution ratio between two inputs. (T/F)

Answer 5

• TRUE

Question 6

Isoquants representing larger amounts of output will be further from the graph’s origin. (T/F)

Answer 6

• TRUE

Question 7

It is always a good idea to produce the maximum amount of yield possible.

Answer 7

• FALSE

Question 8

The “law of diminishing marginal returns” means that as the level of input is increased

• the amount of product produced increases faster than the amount of input used.
• the product selling price decreases.
• the amount of product produced increases at the same rate as the amount of input used.

Answer 8

• the amount of product produced increases faster than the amount of input used.

Question 9

In stage 3, MPP is negative. (T/F)

Answer 9

• TRUE

Question 10

MPP can never be negative.

Answer 10

• FALSE