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Name: e xemSon Port I: 30 Multiple Choice Questions (One point for each correct answer) 1. A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the production function. Suppose the economy's production function is Y- 75x N xK, where K- 1000 and N 20, what happens if both inputs K and N are tripled? a. Y doubles. b. Y triples. c. Y quadruples d. Y is unchanged. 2. An adverse supply shock would shift the production function down and decrease marginal products at every level of employment. Suppose that the an economy's production function is represented by Y- AF(K, N). Base on its production function, which term would explain this economy experiences an adverse supply shock? b. F С.К. 3. The fact that the production function relating output to capital becomes flatter as we move from left to right means that a. the marginal product of capital is positive. c. the marginal product of labor is positive. b. there is diminishing marginal productivity of labor d. there is diminishing marginal productivity of capital. 4. According to profit maximization rule, a decrease in the real wage would result in a a. shift of the labor demand curve, causing a decrease in the number of workers hired by the firm. b. shift of the labor demand curve, causing an increase in the number of workers hired by the firm. c. movement along the labor demand curve, causing a decrease in the number of workers hired by the firm. d. movement along the labor demand curve, causing an increase in the number of workers hired by the firm. 5. According to profit maximization rule, an increase in the number of workers hired by a firm could result from a. an increase in the marginal revenue product of labor. e. a decrease in the marginal revenue product of labor. b, an increase in the marginal product of labor d. a decrease in the marginal product of labor 6. According to profit maximization rule, firms hire labor at the point where the a. real wage rate equals the marginal product of capital. b. real wage rate equals the marginal revenue product of labor. c. real wage rate equals the marginal revenue product of capital. d. real wage rate equals the marginal product of labor 7. Which of the following events would lead to an increase in the marginal product of labor for every quantity of labor? a. An increase in the real wape. e. A decrease in the real wage. b. A favorable supply shock such as a fall in the price of oil. d. An adverse supply shock, such as a reduced supply of raw materials. 8. The aggregate supply of labor is the a total amount of time a person works over his or her lifetime b. total amount of time a person spends in the labor force over his or her lifetime. c. sum of the labor supplied by everyone in the economy unemployment rate. 9 As a result of the superb economics essay that you wrote during this quarter, you won the Adam Smith prize of s100. The receipt of these funds would be an example of a the income effect being stronger than the substitution effect. c, the substitution effect being stronger than the income effect b, a pure income effect. d. a pure substifution effect RMUNNICHA