Deck 5: Production

Question 1

Which of the following is NOT a factor of production?

A)labor
B)capital
C)money
D)materials

Answer 1

money

Question 2

Which of the following is an output of production?

A)a haircut
B)a U.S. savings bond
C)a share of Acme Corporation stock
D)None of the above.

Answer 2

a haircut

Question 3

A production function tells the firm

A)the maximum output it can expect to produce with a given mix of inputs.
B)the average output it can expect to produce with a given mix of inputs.
C)the minimum output it can expect to produce with a given mix of inputs.
D)the average level of production for other firms in the industry.

Answer 3

the maximum output it can expect to produce with a given mix of inputs.

Question 4

A factor of production that cannot be easily changed in the relevant time period is called a

A)short-run factor.
B)fixed input.
C)variable input.
D)production anchor.

Question 5

With respect to production, the short run is best defined as a time period

A)lasting about six months.
B)lasting about two years.
C)in which all inputs are fixed.
D)in which at least one input is fixed.

Question 6

A firm that engages in efficient production

A)cannot produce the same output with fewer inputs.
B)could produce the same output with fewer inputs if it wanted to.
C)is not interested in profit maximization.
D)uses old technology to minimize costs.

Question 7

Which of the following statements is TRUE in the short run?

A)Generally, labor is a fixed input.
B)Generally, capital is a fixed input.
C)Raw materials are generally considered to be fixed inputs.
D)None of the above.

Question 8

Which of the following is NOT an output of the production function?

A)a haircut
B)a share of Acme Corporation stock
C)a case of soda pop
D)an extra-large pepperoni pizza

Question 9

Which of the following is least likely to be considered a capital input?

A)a sewing machine
B)a tractor
C)a telephone
D)a ten dollar bill

Question 10

Which of the following statements is TRUE?

A)Labor is always a variable input, whereas Capital is always a fixed input.
B)Labor is always a fixed input, whereas Capital is always a variable input.
C)Labor can be a fixed input., and Capital can be a variable input.
D)Labor can be a fixed input, and Capital is always a fixed input.

Question 11

A firm engaging in efficient production, using current technology, ________ produce its current level of production with ________ inputs.

A)could; fewer
B)cannot; fewer
C)cannot, more
D)cannot; different

Question 12

Which of the following statements is TRUE in the short run?

A)Generally, labor is a variable input.
B)Generally, capital is a variable input.
C)Raw materials are generally considered to be fixed inputs.
D)Whether or not an input is considered fixed is dependent on the price paid for the input.

Question 13

Which of the following is an input to the production process?

A)a janitor's time
B)a cement mixer
C)Both A and B
D)None of the above.

Question 14

Which of the following is likely to have the shortest long run?

A)a nail salon
B)a construction firm
C)an electric company
D)a container ship operations company

Question 15

In the long run, all factors of production are

A)variable.
B)fixed.
C)materials.
D)rented.

Question 16

Which of the following statements best describes a production function?

A)the maximum profit generated from given levels of inputs
B)the maximum level of output generated from given levels of inputs
C)all levels of output that can be generated from given levels of inputs
D)all levels of inputs that could produce a given level of output

Question 17

Which of the following is least likely to be considered an input to production?

A)a supervisor's time
B)an integrated circuit fabrication plant
C)wind
D)None of the above.

Question 18

Which of the following statements is TRUE?

A)Labor is always a variable input.
B)Capital is always a fixed input.
C)Materials are always variable inputs.
D)None of the above.

Question 19

A factor of production that can be easily changed in the relevant time period is called a

A)fixed input.
B)temporary input.
C)variable input.
D)substitution input.

Question 20

Which of the following is likely to have the longest long run?

A)a beauty salon.
B)a pizza parlor.
C)a road construction firm.
D)an airline.

Question 21

At any given point on the curve, the slope of the total product curve always equals

A)the ratio of the marginal product and the average product.
B)the change in input divided by the change in output.
C)the average product of the input.
D)the marginal product of the input.

Question 22

Average product will fall as long as

A)marginal product is falling.
B)it exceeds marginal product.
C)it is less than marginal product.
D)the number of workers is increasing.

Question 23

If the average product of labor equals the marginal product of labor, then

A)the average product of labor is at a maximum.
B)the marginal product of labor is at a maximum.
C)Both A and B above.
D)Neither A nor B above.

Question 24

The Average Product of Labor is

A)the change in total product resulting from an extra unit of labor, holding other factors constant.
B)the ratio of output to the number of workers used to produce that output.
C)the amount of output that can be produced by a given amount of labor.
D)equal to the marginal product of labor when the average product is increasing.

Question 25

The length of the short-run is the same for all firms.

Question 26

Given the production function q = 4LK, what is the marginal product of labor when capital is fixed at 25?

A)4K
B)100
C)100K
D)100L

Question 27

Which of the following inputs is normally considered to be fixed in the short run?

A)labor
B)capital
C)money
D)All of the above.

Question 28

Joey cuts grass during the summer. He owns one lawn mower. For him, the short run is equal to

A)the amount of time it takes to acquire more customers.
B)the amount of time it takes to hire an additional employee.
C)the amount of time it takes to hire an additional employee and buy another lawn mower.
D)the amount of time it takes to mow one lawn.

Question 29

The Marginal Product of Labor is

A)the change in total product resulting from an extra unit of labor, holding other factors constant.
B)the ratio of output to the number of workers used to produce that output.
C)the amount of output that can be produced by a given amount of labor.
D)equal to the marginal product of labor when the average product is increasing.

Question 30

Which of the following inputs is normally considered to be variable in the short run?

A)labor
B)raw materials
C)capital
D)Both A and B

Question 31

Which of the following inputs is normally considered to be variable in the short run?

A)labor
B)capital
C)money
D)time

Question 32

Given the production function q = 4L + K, what is the marginal product of labor when capital is fixed at 50?

A)54
B)4
C)50
D)250

Question 33

Joey cuts grass during the summer. He rents a lawn mower from his dad. Which of the following statements best illustrates the difference between the short run and the long run for Joey?

A)Joey's friends say they will help him, but when he calls them, they say they have other things to do.
B)When Joey acquires more customers, he responds by working more hours. Next year, he will buy a lawn mower and split the work with his brother.
C)Some customers pay Joey immediately; others wait till the following week.
D)Joey has had to turn away some customers because he is already too busy.

Question 34

If the marginal product of labor is constant for all levels of output, then the average product of labor

A)is constant.
B)equals the marginal product of labor.
C)Both A and B above.
D)Either A or B above but not both.

Question 35

Jennifer is the only employee of her sole proprietorship. She is entertaining the idea of hiring an additional employee. She knows that on her own she can produce 100 units per day. Jennifer figures that Applicant A will help her produce 175 units per day whereas Applicant B will help her produce 155 units per day. Which of the following statements is MOST accurate?

A)Applicant B has a marginal product of 75 units.
B)Applicant B has an average product of 77.5 units.
C)Applicant A has a marginal product of 75 units.
D)Applicant A has an average product of 87.5 units.

Question 36

Given the production function q = 1.37LK, what is the marginal product of labor?

A)1.37
B)0
C)1.37K
D)Cannot be determined with the information given.

Question 37

Explain why labor might not always be a variable input.

Question 38

Given the production function q = 4L + K, what is formula for the marginal product of labor?

A)4
B)4 + K
C)4K
D)Cannot be determined with the information given.

Question 39

Total Product is

A)the change in total product resulting from an extra unit of labor, holding other factors constant.
B)the ratio of output to the number of workers used to produce that output.
C)the amount of output that can be produced by a given amount of labor.
D)equal to the marginal product of labor when the average product is increasing.

Question 40

The above table shows a short-run production function for Albert's Pretzels. The marginal product of labor

A)rises then falls as the amount of capital increases.
B)falls then rises as the amount of labor increases.
C)is greater than or equal to the average product of labor for all amounts of labor.
D)is less than or equal to the average product of labor for all amounts of labor.

Question 41

Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run.

Question 42

Which of the following statements best summarizes the law of diminishing marginal returns?

A)In the short run, as more labor is hired, output diminishes.
B)In the short run, as more labor is hired, output increases at a diminishing rate.
C)In the short run, the amount of labor a firm will hire diminishes as output increases.
D)As more labor is hired, the length of time that defines the short run diminishes.

Question 43

Which of the following is NOT a property of isoquants?

A)They do not cross.
B)The closer they are to the origin, the higher the level of output.
C)They have a downward slope.
D)They are "thin."

Question 44

If capital is fixed, but a firm varies labor

A)the firm stays on the same isoquant.
B)the firm moves to a new isoquant.
C)the firm might move to a new isoquant, depending on how much labor is added.
D)the firm's output will be dependent on the marginal rate of technical substitution.

Question 45

The above table shows the short-run production function for Albert's Pretzels. The marginal product of labor for the third worker is

A)6.
B)8.
C)24.
D)not known from the information provided.

Question 46

The above table shows the short-run production function for Albert's Pretzels. The average product of labor

A)increases first and then decreases.
B)decreases first and then increases.
C)decreases throughout.
D)increases throughout.

Question 47

The above table shows the short-run production function for Albert's Pretzels. The law of diminishing marginal product

A)appears with the second worker.
B)has not yet appeared for any of the levels of labor.
C)first appears with the fifth worker.
D)is refuted by this evidence.

Question 48

The actual time length of the short run is determined by when diminishing marginal returns start.

Question 49

The slope of an isoquant tells us

A)how much output increases when both inputs are increased.
B)the increase in MPL when capital increases.
C)the decrease in capital necessary to keep output constant when labor increases by one unit.
D)the decrease in capital necessary to keep MPL constant when labor increases by one unit.

Question 50

Isoquants

A)hold utility constant.
B)hold capital constant.
C)hold labor constant.
D)hold output constant.

Question 51

The above table shows the short-run production function for Albert's Pretzels. The marginal product of labor equals the average product of labor

A)for all levels of labor.
B)at none of the levels of labor.
C)only for the first worker.
D)only for the fifth worker.

Question 52

Thomas Malthus' prediction of mass starvation resulting from diminishing marginal returns has NOT been fulfilled because

A)the law of diminishing marginal returns did not hold in this case.
B)Malthus ignored other factors like technological change.
C)relative to Malthus' day, a larger percentage of today's labor force works in the agricultural sector.
D)All of the above.

Question 53

Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.

Question 54

The law of diminishing marginal returns

A)implies that the marginal product of labor must fall.
B)requires using superior technology to increase output.
C)means that total output will always fall.
D)None of the above.

Question 55

The steeper an isoquant is

A)the greater is the marginal product of labor relative to that of the marginal product of capital.
B)the greater is the substitutability between capital and labor.
C)the greater is the need to keep capital and labor in fixed proportions.
D)the greater is the level of output.

Question 56

An isoquant represents levels of capital and labor that

A)have constant marginal productivity.
B)yield the same level of output.
C)incur the same total cost.
D)All of the above.

Question 57

Diminishing marginal returns lead to diminishing returns

A)when marginal returns fall but remain positive.
B)only in theory.
C)when marginal returns become negative.
D)when labor exceeds capital.

Question 58

If marginal productivity is decreasing as more labor is hired, then average productivity must be decreasing as well.

Question 59

Which situation is most likely to exhibit diminishing marginal returns to labor?

A)a factory that obtains a new machine for every new worker hired
B)a factory that hires more workers and never increases the amount of machinery
C)a factory that increases the amount of machinery and holds the number of workers constant
D)None of these situations will result in diminishing marginal returns to labor.

Question 60

Joey cuts lawns during the summer. Let q equal the number of acres mowed per day, and let L equal the number of hours worked per day. Joey never works more than eight hours per day, and during that time his short-run production function is q = 0.2 ∗ L. Which of the following statements is FALSE?

A)Joey's marginal product equals his average product.
B)Joey's marginal product diminishes by 0.2 for each additional hour worked.
C)Joey's average product is constant.
D)Joey's marginal product is constant.

Question 61

Which graph in the above figure represents the isoquants where, as the amount of labor used increases and the amount of capital used decreases, the marginal product of labor rises (units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis)?

A)Graph A
B)Graph B
C)Graph C
D)Graph D

Question 62

The slope of an isoquant

A)gives the substitutability of inputs while keeping output constant.
B)shows how output varies while keeping inputs constant.
C)is independent of the marginal product of capital.
D)shows the firm's returns to scale.

Question 63

At Joey's Lawncutting Service, a lawn mower cannot cut grass without a laborer. A laborer cannot cut grass without a lawn mower. Which graph in the above figure best represents the isoquants for Joey's Lawncutting Service when units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis?

A)Graph A
B)Graph B
C)Graph C
D)Graph D

Question 64

Lectures in microeconomics can be delivered either by an instructor (labor)or a movie (capital)or any combination of both. Each minute of the instructor's time delivers the same amount of information as a minute of the movie. Which graph in the above figure best represents the isoquants for lectures in microeconomics when units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis?

A)Graph A
B)Graph B
C)Graph C
D)Graph D

Question 65

If capital increases by two units, and MRTS is 1, then what is the MPL?

A)2
B)1/2
C)1
D)Not enough information given.

Question 66

L-shaped isoquants imply that production requires that the inputs

A)are perfect substitutes.
B)are imperfect substitutes.
C)cannot be used together.
D)must be used together in a certain proportion.

Question 67

If MPL = 3, and MRTS = -4 what is MPK?

A)12
B)-12
C)3/4
D)-3/4

Question 68

The marginal rate of technical substitution shows

A)how many machines can be replaced by computers, keeping output constant.
B)how many computers are needed to replace workers so that output can increase.
C)the rate at which technology advances change marginal productivity.
D)how many workers can do the job of one computer, keeping output constant.

Question 69

With capital on the vertical axis and labor on the horizontal axis, vertical isoquants imply that

A)capital and labor are perfect substitutes.
B)capital and labor must be used together in a fixed proportion.
C)capital is not productive.
D)labor is not productive.

Question 70

Which of the following is an example of a production function with fixed proportions?

A)putting orange juice into cartons
B)mowing lawns
C)cutting hair
D)teaching economics

Question 71

To say that isoquants are convex is to say that

A)the marginal rate of technical substitution falls as labor increases.
B)capital and labor are perfect substitutes.
C)labor, but not capital, is subject to the law of diminishing marginal returns.
D)there are constant returns to scale.

Question 72

Lectures in microeconomics can be delivered either by an instructor (labor)or a movie (capital)or any combination of both. Yet, it gets harder and harder to substitute more movies for an instructor the more movies are already used. Which graph in the above figure best represents the isoquants for lectures in microeconomics when units of capital per day is on the vertical axis and units of labor per day is on the horizontal axis?

A)Graph A
B)Graph B
C)Graph C
D)Graph D

Question 73

One way to explain the convexity of isoquants is to say that

A)as labor increases and capital decreases, MPL rises while MPK falls.
B)as labor increases and capital decreases, MPL falls while MPK rises.
C)as labor increases and capital decreases, MPL and MPK both fall.
D)as labor increases and capital decreases, MPL and MPK both rise.

Question 74

If a firm fired one worker and lost 12 units of production and decides to add one more unit of capital, then to remain on the same isoquant what must be TRUE?

A)The MPK of the next unit of capital added equals 12.
B)The firm must force the other workers to work more.
C)The firm will experience a decline in output.
D)The marginal rate of technical substitution is greater than 12.

Question 75

If you are running a winery and you need one bottle for every 750ml of wine, then your production function

A)is inefficient.
B)is considered "fixed-proportion."
C)will have a diminishing marginal rate of technical substitution.
D)has downward-sloping, straight line isoquants.

Question 76

If a firm hires one worker and eliminates four units of capital, and hires one more worker and replaces three more units of capital, keeping output constant, then

A)workers and capital are perfect substitutes.
B)the firm is operating inefficiently because capital is more efficient than workers.
C)the firm is experiencing a diminishing marginal rate of technical substitution.
D)there are decreasing returns to scale.

Question 77

Isoquants that are downward-sloping straight lines imply that the inputs

A)are perfect substitutes.
B)are imperfect substitutes.
C)cannot be used together.
D)must be used together in varying proportions.

Question 78

The marginal rate of technical substitution always equals

A)the slope of the total product curve.
B)minus the ratio of the marginal products of inputs.
C)the change in output due to a change in the amount of one input.
D)the distance between two isoquants.

Question 79

If MPK = 3, and MRTS = -4 what is MPL?

A)12
B)-12
C)4/3
D)-4/3

Question 80

In the above figure, Graph D with units of capital on the vertical axis and units of labor on the horizontal axis implies that

A)the marginal product of labor is increasing as more labor is employed.
B)the marginal product of labor is decreasing as more labor is employed.
C)the capital and labor are perfect substitutes.
D)capital and labor have to be employed in fixed proportions.