Question

1. If a firm moves from one point on a production isoquant to another point on the same isoquant, which of the following will certainly not happen?

options:

1-) A change in the level of output

2-) A change in the marginal products of the inputs

3-) A change in the rate of technical substitution

4-) A change in profitability

5-) All of these.

2. When Farmer Bob applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 − [1/N] bushels of corn. If the price of corn is $1 per bushel and the price of fertilizer is $0.75 per pound, then how many pounds of fertilizer per acre should Farmer Bob use in order to maximize his profits?

1-) 12

2-) 25

3-) 50

4-) 75

5-) None of these are correct.

3.A profit maximizing monopolist sets:

1-) average cost equal to price

2-) marginal cost equal to price

3-) price equal to marginal revenue

4-) marginal cost equal to marginal revenue

4. If the production function is f(L, K) = aL +2aK where a > 0 is a constant, L is for Labor and K is for Kapital, then the ratio of Marginal Product of Labor to Marginal Product of Capital is:

1-) 1/2

2-) 1

3-) 5

4-) 2

None of these are correct.

Answer 1

1) if a firm moves from one point on a production isoquant to another point on the same isoquant it means that the output level has not changed for certain. This is because by definition an isoquant is a A locus of all the combination of two inputs which gives the same level of output. Therefore at all the points on an isoquant the level of output remains same.

The question has asked which of the following will not certainly happen.

So we can say that if a firm moves from one point on a production isoquant to another point on the same isoquant a change in the level of output will certainly not happen.

However the marginal product of inputs may change as we move from one point on isoquant to another point on isoquant. There is a change in rate of technical substitution as a result of change in marginal product as we move from one point to another on the same isoquant. There will not be any change in profitability since the output level is unchanged.

So we can say that if a firm moves from one point on a production isoquant to another point on the same isoquant a change in the level of output will certainly not happen.

Therefore, Option 1 is correct. i.e, a change in level of Output.