BUSINESS

17) The possible combinations of goods that can be purchased with a specific income are called the

A) budget constraint.

B) indifference map.

C) marginal rate of substitution.

D) income-consumption curve.4

18) Suppose that the quantity of good y is measured along the vertical axis and that the

quantity of good x is measured along the horizontal axis. If the price of good x is $5 and

the price of good y is $10 when income is $200 per time period, the slope of the consumer’s

budget constraint will be

A) -0.5.

B) -2.

C) -5.

D) -10.

19) Using the above figure, we can conclude that

A) the consumer will purchase goods at combination M.

B) the consumer is indifferent between J and M.

C) K is the optimal combination of goods.

D) L is preferred to K.

20) In the above figure, if the budget line is the line DF, the consumer will maximize utility at point

A) A.

B) B.

C) C.

D) G.5

21) Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies

together, and three workers can produce 65 cookies together. What is the marginal

product of the 2nd worker?

A) 15 cookies

B) 20 cookies

C) 30 cookies

D) 35 cookies

22) Changes in production functions are associated with changes in

A) the level of output.

B) demand.

C) the levels of costs.

D) technology.

23) When El Torito Restaurant is deciding how many waiters to hire for a holiday

weekend, it is making a ________ decision.

A) plant-size

B) long-run

C) short-run

D) fixed-input

24) In the long run, a firm can change

A) nothing.

B) only one input, such as plant size.

C) all inputs.

D) None of the above are correct.

25) If marginal product is negative, then

A) total product is rising.

B) total product is falling.

C) marginal cost is falling.

D) average profit is rising.

26) Marginal physical product of the first worker is 100, 120 for the second, 80 for the

third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth,

and 0 for the ninth. What is total product for the fifth worker and the ninth worker

respectively?

A) 335; 341

B) 335; 0

C) 5; 0

D) 0; 56

27) In the above table, average physical product is 30 snowboards when

A) 4 workers are employed.

B) 3 workers are employed.

C) 2 workers are employed.

D) 1 worker is employed.

28) In the above table, how many workers are employed when marginal product reaches its

maximum?

A) 1

B) 2

C) 3

D) 4

29) Any activity that results in the conversion of resources into products that can be used in

consumption is

A) planning.

B) investment.

C) production.

D) discounting.

30) The relationship Q = f(K, L) is an example of a

A) cost function.

B) production function.

C) demand equation.

D) profit equation.7

31) Using the above table, the total product and average physical product when 3 workers

are employed are

A) 36 and 12, respectively.

B) 39 and 13, respectively.

C) 37 and 27, respectively.

D) 40 and 10, respectively.

32) Using the above table, the total product and average physical product when 5 workers

are employed are

A) 61 and 21, respectively.

B) 62 and 13, respectively.

C) 62 and 15, respectively.

D) 61 and 12.2, respectively.

33) Using the above table, the average physical product and marginal physical w hen 4

workers are employed are

A) 13 and 13, respectively.

B) 13 and 14, respectively.

C) 13 and 9, respectively.

D) 14 and 13, respectively.

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