78
49) Refer to Figure 7.10. If this firm’s cost of capital is $40 per unit and its cost of labor is $20 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
50) Refer to Figure 7.10. If the isocost line represents a total cost of $2,400, then the firm’s cost of capital is
________ per unit and its cost of labor is ________ per unit.
A) $10; $20
B) $12; $24
C) $24; $12
D) $2; $1
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–17
79
Refer to the information provided in Figure 7.11 below to answer the question(s) that follow.
Figure 7.11
51) Refer to Figure 7.11. If the firm’s cost of capital is $30 per unit and its cost of labor is $60 per unit, the
isocost line represents a total cost of
A) $2,000.
B) $3,000.
C) $6,000.
D) $8,000.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-9
52) Refer to Figure 7.11. 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
80
53) Refer to Figure 7.11. At Point C, the slope of isoquant 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
54) Refer to Figure 7.11. 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
55) Refer to Figure 7.11. If the firm’s cost of capital is $15 per unit and its cost of labor is $30 per unit, the
isocost line represents a total cost of
A) $2,000.
B) $3,000.
C) $6,000.
D) $8,000.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-9
56) Refer to Figure 7.11. If the firm’s cost of capital is $24 per unit and its cost of labor is $48 per unit, the
isocost line represents a total cost of
A) $2,400.
B) $3,600.
C) $4,800.
D) $7,200.
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-9
81
57) Refer to Figure 7.11. If the isocost line represents a total cost of $7,200, the firm’s cost of capital is
________ per unit and its cost of labor is ________ per unit.
A) $36; $72
B) $144; $72
C) $72; $36
D) $200; $100
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-9
58) Refer to Figure 7.11. If the firm’s cost of capital is $18 per unit, then its cost of labor is ________ per
unit.
A) $1.80
B) $9
C) $36
D) $900
Topic: Appendix: Isoquants and Isocosts
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-9
59) The least costly way to produce any given level of output is indicated by
A) the point of intersection between the isoquant corresponding to that level of output and the Y–axis.
B) the point of intersection between the isoquant corresponding to that level of output and the X–axis.
C) the point of tangency between an isocost line and the isoquant corresponding to that level of output.
D) the isocost line corresponding to that level of output.
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
60) The point of tangency between an isocost line and an isoquant is necessarily
A) the profit–maximizing combination of inputs that should be hired to produce that output level.
B) the least costly combination of inputs that can be hired to produce the output level.
C) both the profit–maximizing and least costly combination of inputs that can be used to produce the
output level.
D) the minimum amount of output that can be attained for that level of expenditure.
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
82
61) The total cost curve for a firm can be derived from isoquants and isocost lines by
A) varying the prices of capital and labor and keeping total expenditure constant.
B) varying production technologies, but keeping input prices and expenditure levels constant.
C) varying total expenditures while keeping input prices and production technology constant.
D) varying the price of either capital or labor while keeping total expenditures and production
technology constant.
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
62) The slope of the isoquant is
A) –MPL/MPK.
B) the marginal rate of technical substitution.
C) negative.
D) All of the above are correct.
Topic: Appendix: Isoquants and Isocosts
Skill: Definition
Learning Outcome: Micro–17
63) A graph showing ________ is an isoquant.
A) all combinations of capital and labor that have the same total cost
B) all combinations of capital and labor that a firm can use to produce a given amount of output
C) all combinations of products desired by consumers
D) all combinations of products that yield the same total utility
Topic: Appendix: Isoquants and Isocosts
Skill: Definition
Learning Outcome: Micro–17
64) The higher the level of output, the farther ________ the isoquant will lie.
A) up and to the right
B) down and to the right
C) up and to the left
D) down and to the left
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
83
65) The marginal rate of technical substitution is the ratio of
A) the marginal product of labor to the marginal product of capital.
B) capital to labor.
C) capital to the price of capital.
D) labor to the price of labor.
Topic: Appendix: Isoquants and Isocosts
Skill: Definition
Learning Outcome: Micro–17
66) The ________ to produce any given level of output is indicated by the point of tangency between an
isocost line and the isoquant corresponding to that level of output.
A) only possible way
B) most costly way
C) least costly way
D) least desirable way
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
67) At each point of tangency for isoquants and isocost lines, the slope of the isoquant must be ________
the slope of the isocost line.
A) greater than
B) less than
C) equal to
D) the reciprocal of
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
68) A total cost curve shows the ________ of producing each level of output.
A) marginal cost
B) minimum cost
C) maximum cost
D) optimal input combination
Topic: Appendix: Isoquants and Isocosts
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–17
84
69) The slope of the ________ is –MPL/MPK.
A) isoquant
B) total utility curve
C) isocost line
D) marginal utility curve
Topic: Appendix: Isoquants and Isocosts
Skill: Definition
Learning Outcome: Micro–17