71
A) $1,200.
B) $1,800.
C) $2,400.
D) indeterminate from this information, as the price of labor is not given.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
Refer to the information provided in Figure 7.9 below to answer the question(s) that follow.
Figure 7.9
28) Refer to Figure 7.9. The firm is currently along isocost CD. If the price of capital is $30, then the price
of labor is
A) $4.
B) $30.
C) $180.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
72
29) Refer to Figure 7.9. The firm’s isocost line would shift from CE to CD if
A) the price of capital rises.
B) the firm’s total expenditure on inputs decreased.
C) the price of labor rises.
D) either the price of labor fell or the firm’s total expenditure on inputs decreased.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
30) Refer to Figure 7.9. The slope of isocost AB is
A) –1.
B) 0.
C) 1.
D) indeterminate from this information, as the prices of capital and labor are not given.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
31) Refer to Figure 7.9. The slope of isocost CE is
A) –1/2.
B) –1.
C) –2.
D) indeterminate from this information, as the prices of capital and labor are not given.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
32) Refer to Figure 7.9. The firm’s isocost line could shift from AB to CD if
A) the price of capital decreased.
B) the firm’s total expenditures increased by 50%.
C) the price of capital and labor each decreased by 33.3%.
D) either B or C
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
73
33) Refer to Figure 7.9. The firm is currently along isocost CD. If the price of capital is $40, then the price
of labor is
A) $6.
B) $40.
C) $240.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
34) Refer to Figure 7.9. The firm’s isocost line would shift from CD to CE if
A) the price of capital falls.
B) the price of labor falls.
C) the firm’s total expenditure on inputs increases.
D) either the price of labor rises or the firm’s total expenditure on inputs increases.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
35) Refer to Figure 7.9. The slope of isocost AB is
A) greater than the slope of isocost CD.
B) less than the slope of isocost CD.
C) equal to the slope of isocost CD.
D) indeterminate from this information, as the prices of capital and labor are not given.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
36) Refer to Figure 7.9. The slope of isocost CD is
A) greater than the slope of isocost AB.
B) less than the slope of isocost AB.
C) equal to the slope of isocost AB.
D) indeterminate from this information, as the prices of capital and labor are not given.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
74
37) Refer to Figure 7.9. The firm is currently along isocost CD. If the price of labor is $42, then the price of
capital is
A) $21.
B) $42.
C) $63.
D) $84.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
38) Refer to Figure 7.9. The firm‘s isocost line could shift from CD to AB if
A) the price of capital increased.
B) the firm’s total expenditures decreased by 33%.
C) the price of capital and labor each increased by 33%.
D) either B or C
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
75
Refer to the information provided in Figure 7.10 below to answer the question(s) that follow.
Figure 7.10
39) Refer to Figure 7.10. If this firm’s cost of capital is $20 per unit and its cost of labor is $10 per unit, the
isocost line represents a total cost of
A) $2,000.
B) $3,000.
C) $4,000.
D) $8,000.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
40) Refer to Figure 7.10. The slope of the isocost line is
A) –2.
B) –1/2.
C) 1/2.
D) 2.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
76
41) Refer to Figure 7.10. At Point C, the absolute value of the slope of q2 = 200 is
A) less than 2.
B) exactly equal to 2.
C) greater than 2.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-9
42) Refer to Figure 7.10. At Point C, the slope of q2 = 200 is
A) –2.
B) –1/2.
C) –1.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
43) Refer to Figure 7.10. If the firm’s level of total cost is represented by the given isocost line, the firm’s
optimal combination of capital and labor is given by
A) point A.
B) point B.
C) point C.
D) 50 units of capital and 50 of labor.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
44) Refer to Figure 7.10. The firm’s level of total cost is represented by the given isocost line. At the
optimal combination of capital and labor, the firm produces ________ units of output.
A) 100.
B) 200.
C) 300.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
77
45) Refer to Figure 7.10. If this firm’s cost of capital is $10 per unit and its cost of labor is $5 per unit, the
isocost line represents a total cost of
A) $1,000.
B) $2,000.
C) $3,000.
D) $4,000.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
46) Refer to Figure 7.10. The slope of the isocost line (in absolute value) is
A) greater than 1.
B) less than one.
C) equal to 1.
D) equal to 0.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
47) Refer to Figure 7.10. At Point C the slope of the q2 = 200 isoquant is
A) –2.
B) –1/2.
C) –1.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
48) Refer to Figure 7.10. At Point A the absolute value of the slope of the q1 = 100 isoquant is
A) less than 2.
B) exactly equal to 2.
C) greater than 2.
D) indeterminate from this information.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17