Deck 11: Output and Costs

Question 1

The long run is a period of time in which

A) all factors of production are variable.
B) all factors of production are fixed.
C) some but not all factors of production are fixed.
D) some but not all factors of production are variable.

Answer 1

all factors of production are variable.

Question 2

An example of a short-run fixed factor of production is

A) capital equipment.
B) labor.
C) electricity.
D) postage for mailing.

Answer 2

capital equipment.

Question 3

The long run

A) means a long period of time, always longer than a year.
B) is a period of time in which all factors of production can be varied.
C) is different for different firms.
D) Both answers B and C are correct.

Answer 3

Both answers B and C are correct.

Question 4

A cost that has already been made and cannot be recovered is called a

A) variable cost.
B) fixed cost.
C) sunk cost.
D) marginal cost.

Question 5

The short run is a time period during which

A) a firm can earn a normal profit.
B) all factors of production are variable.
C) at least one factor of production is fixed.
D) all factors of production are fixed.

Question 6

In the long run, a firm has

A) no factors of production that are fixed.
B) no factors of production that are variable.
C) no factors of production that are either fixed or variable.
D) fixed factors of production but no variable resources.

Question 7

A period of time in which the quantity of at least one factor of production used by a firm is fixed is called the

A) market period.
B) intermediate run.
C) short run.
D) long run.

Question 8

All the decisions made by people who operate firms have one overriding objective, which is to ________.

A) make maximum attainable profit
B) maximize the firm's total revenue
C) maximize the firm's market share
D) maximize the quantity that the firm sells

Question 9

The short run is a time frame in which

A) at least one factor of production is fixed.
B) all factors of production can be varied.
C) all factors of production are fixed.
D) at least one factor of production can be varied.

Question 10

When the demand for electricity peaks during the hottest days of summer, Florida Power and Light Company can generate more electricity by using more fuel and increasing the working hours of many of its employees. The company cannot, however, increase electric power production by building additional generating capacity. This means that the company is in the

A) market run.
B) short run.
C) intermediate run.
D) long run.

Question 11

A period of time in which the quantity of all factors of production used by a firm can be varied is called the

A) market period.
B) variable run.
C) short run.
D) long run.

Question 12

The short run is a time frame in which

A) the quantities of some factors of production are fixed and the quantities of other factors of production can be varied.
B) the quantities of all factors of production can be varied.
C) the quantities of all factors of production are fixed.
D) all costs are sunk costs.

Question 13

After constructing a new factory, the cost of building the factory is a

A) past cost.
B) sunk cost.
C) variable cost.
D) None of the above answers are correct.

Question 14

An example of a variable factor of production in the short run is

A) a building.
B) capital equipment.
C) an employee.
D) land.

Question 15

The short run is a period of time in which

A) the quantity of at least one factor of production is fixed.
B) the amount of output is fixed.
C) prices and wages are fixed.
D) nothing the firm does can be altered.

Question 16

In the short run

A) all factors of production are fixed.
B) at least one factor of production is fixed.
C) all factors of production are variable.
D) there are no variable costs.

Question 17

The short run is a period of time in which

A) the quantity used of at least one factor of production is fixed.
B) the quantities used of all factors of production are fixed.
C) output prices are fixed.
D) factor of production prices are fixed.

Question 18

Economists define the short run as a period of time so short that

A) the amount of output cannot be changed except under diminishing marginal returns.
B) the amount of output cannot be changed at all.
C) only one factor of production can be varied.
D) at least one factor of production cannot be varied.

Question 19

The long run is a time frame in which

A) the quantities of some factors of production are fixed and the quantities of other factors of production can be varied.
B) the quantities of all factors of production can be varied.
C) the quantities of all factors of production are fixed.
D) all costs are sunk costs.

Question 20

In the short run

A) all factors of production are fixed.
B) labor usage must remain fixed.
C) a firm's plant is fixed.
D) no factors of production are fixed.

Question 21

Which of the following factors is fixed in the long run?

A) capital
B) land
C) entrepreneurship
D) none of the above because all factors are variable in the long run

Question 22

In the long run, a firm can vary

A) its capital but not its labor.
B) its labor but not its capital.
C) both its labor and its capital.
D) neither its labor nor its capital.

Question 23

Points on a firm's total product curve are

A) both attainable and technologically efficient.
B) neither attainable nor technologically efficient.
C) attainable but not technologically efficient.
D) technologically efficient but not attainable.

Question 24

In the short run

A) the size of the plant is fixed.
B) all factors of production are variable.
C) all factors of production are fixed.
D) some firms experience increasing returns to scale.

Question 25

The marginal product of labor is the

A) change in output resulting from a one-unit increase in labor with all other inputs remaining the same.
B) maximum output attainable with fixed factors of production when labor is the only variable factor of production.
C) output level above which the slope of the total product curve falls.
D) output level above which the rate of total product per unit of labor falls.

Question 26

In economics, the short run is the time frame in which the quantities of ________ and the long run is the period of time in which ________.

A) some factors of production are variable; the quantities of all factors of production are fixed
B) all factors of production are variable but technology is fixed; technology is variable
C) all factors of production are fixed; the quantities of all factors of production can be varied
D) some factors of production are fixed; the quantities of all factors of production can be varied

Question 27

The long run is a time period in which

A) one year or less elapses.
B) all factors of production are variable.
C) all factors of production are fixed.
D) there is at least one fixed factor of production and at least one variable factor of production.

Question 28

The marginal product of labor is equal to the

A) total product divided by the total number of workers hired.
B) increase in the total product that results from hiring one more worker with all other inputs remaining the same.
C) slope of the marginal product of labor curve.
D) None of the above answers are correct.

Question 29

Points below a firm's total product curve are

A) both attainable and technologically efficient.
B) neither attainable nor technologically efficient.
C) attainable but not technologically efficient.
D) technologically efficient but not attainable.

Question 30

The long run is distinguished from the short run because only in the long run

A) output prices can vary.
B) factor of production prices can vary.
C) the quantities of all factors of production can be varied.
D) the firm no longer maximizes its profit.

Question 31

A firm's total product curve shows

A) that inefficiency is not possible.
B) how the cost of the fixed resources change when output changes.
C) how the amount of output changes when the quantity of labor changes.
D) that in the long run the firm must adjust the quantity of all the resources it employs.

Question 32

Most total product curves have

A) first increasing and then decreasing marginal returns to labor.
B) output first increasing and then decreasing as labor is added.
C) first decreasing and then increasing marginal returns to labor.
D) output increasing at an increasing rate as labor is added.

Question 33

The marginal product of labor is the change in total product from a one-unit increase in

A) the quantity of labor employed, holding the quantity of other inputs constant.
B) the quantity of capital employed, holding the quantity of labor constant.
C) both the quantity of labor and the quantity of other inputs employed.
D) the wage rate.

Question 34

When the total product curve is drawn in a figure that measures employment along the horizontal axis, it is a graph that shows the

A) minimum cost of producing a given amount of output using different techniques.
B) maximum profit attainable for each unit of output sold per unit of labor employed.
C) maximum output attainable for each quantity of labor employed.
D) minimum output attainable for each quantity of labor employed.

Question 35

Which of the following statements is CORRECT?

A) A firm does not need to take into account its sunk cost when making current decisions.
B) Long-run decisions are easily reversed.
C) Short-run decisions are not easily reversed.
D) In the long run, a firm can change its plant but not the quantity of its labor.

Question 36

Marginal product is

A) the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same.
B) total amount of output produced.
C) total amount of output produced divided by the quantity of labor employed.
D) total amount of output produced divided by price of the output.

Question 37

Total product is

A) the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same.
B) maximum output that a given quantity of labor can produce.
C) maximum amount of output produced by a given quantity of labor divided by the given quantity of labor employed.
D) maximum amount of amount of output produced by a given quantity of labor divided by price of the output.

Question 38

The total output produced with any quantity of labor is equal to the sum of the

A) marginal products of each of the workers hired.
B) average products of each of the workers hired.
C) total wages the firm pays its workers.
D) Both answers A and B are correct.

Question 39

The marginal product of labor is the increase in total product from a

A) one unit increase in the quantity of labor, while holding the quantity of other inputs constant.
B) one unit increase in the quantity of labor, while also increasing the quantity of other inputs by one unit.
C) one dollar increase in the wage rate, while holding the price of other inputs constant.
D) one percent increase in the wage rate, while also increasing the price of other inputs by one percent.

Question 40

All the production points that lie ________ the total product curve are attainable and ________.

A) above; efficient
B) above; inefficient
C) below; efficient
D) below; inefficient

Question 41

The above table shows the total product of producing baseball hats. The average product of 3 workers is equal to

A) 1.67 baseball hats.
B) 6.00 baseball hats.
C) 12.78 baseball hats.
D) 18.00 baseball hats.

Question 42

Average product of labor is equal to ________.

A) total product multiplied by the quantity of labor employed.
B) the total product produced
C) the quantity of labor employed divided by total product
D) total product divided by the quantity of labor employed

Question 43

The average product of labor is

A) the inverse of the average product of capital.
B) the slope of the curve showing the marginal product of labor.
C) the slope of the curve showing the total product of labor.
D) total product divided by the total quantity of labor employed.

Question 44

The above table shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to

A) 25 baseball hats.
B) 21 baseball hats.
C) 7 baseball hats.
D) 6.25 baseball hats.

Question 45

Total Product, Marginal Product, Average Product
In the above table, the marginal product is greatest when the

A) first worker is hired.
B) second worker is hired.
C) third worker is hired.
D) fourth worker is hired.

Question 46

Total Product, Marginal Product, Average Product
In the above table, the marginal product of the fourth worker is

A) 1.
B) 3.
C) 4.
D) 6.

Question 47

Total Product, Marginal Product, Average Product
In the above table, the average product is less than the marginal product

A) when the first worker is hired.
B) when the second worker is hired.
C) when the third worker is hired.
D) for the entire range of output given.

Question 48

Pizza Hut
Using the data in the above table, what is the average product of three employees?

A) 2 pizzas per hour
B) 3 pizzas per hour
C) 4 pizzas per hour
D) 12 pizzas per hour

Question 49

Total Product, Marginal Product, Average Product
In the above table, the average product of three workers is

A) 1.
B) 2.
C) 3.
D) 4.

Question 50

The above (incomplete) table provides information about the relationships between labor and various product measures. The average product of the fourth unit of labor

A) exceeds the marginal product of the fourth unit of labor.
B) is less than the marginal product of the fourth unit of labor.
C) is equal to the marginal product of the fourth unit of labor.
D) is equal to 4.0.

Question 51

The table shows some data that describes Tom's T-Shirts' total product when Tom's has 1 sewing machine. When 4 workers are employed, ________.

A) average product of labor is a maximum
B) marginal product of labor is less than average product of labor
C) marginal product of labor exceeds average product of labor
D) marginal product of labor equals average product of labor

Question 52

Total Product, Marginal Product, Average Product
In the above table, the marginal product of the third worker is

A) 1.
B) 2.
C) 3.
D) 4.

Question 53

The above (incomplete) table provides information about the relationships between labor and various product measures. The amount of labor that maximizes the marginal product of labor is

A) 2 units of labor.
B) 3 units of labor.
C) 4 units of labor.
D) 5 units of labor.

Question 54

The above (incomplete) table provides information about the relationships between labor and various product measures. The total product that can be produced with 6 units of labor is

A) 20.
B) 19.
C) More information is needed to answer the question.
D) None of the above answers is correct.

Question 55

Total Product, Marginal Product, Average Product
In the above table, the marginal product of the second worker is

A) 1.
B) 2.
C) 3.
D) 4.

Question 56

Based on the production data for Pat's Pizza Parlor in the above table, the marginal product of the 4th worker is ________ pizzas.

A) 5
B) 8
C) 10
D) 45

Question 57

Pizza Hut
Using the data in the above table, what is the marginal product of the third employee?

A) 2 pizzas per hour
B) 3 pizzas per hour
C) 4 pizzas per hour
D) 12 pizzas per hour

Question 58

The average product of labor is equal to the

A) total product divided by the total number of workers hired.
B) total number of workers hired divided by the total product.
C) slope of the marginal product of labor curve.
D) Both answers B and C are correct.

Question 59

Pizza Hut
Using the data in the above table, what is the marginal product of the second worker?

A) 4.5 pizzas per hour
B) 4 pizzas per hour
C) 5 pizzas per hour
D) The marginal product is undefined.

Question 60

Average product equals the

A) increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same.
B) total amount of output produced.
C) total amount of output produced divided by the quantity of labor employed.
D) total amount of output produced divided by price of the output.

Question 61

In general, increasing marginal returns occur

A) as output expands at low levels of production.
B) through the entire range of production.
C) as output expands at high levels of production.
D) whenever the slope of the total product curve is positive.

Question 62

Increasing marginal returns to labor might occur at low levels of labor input because of

A) increasing average costs.
B) differing factor proportions.
C) increasing specialization of tasks.
D) decreasing use of machinery and increasing use of technology.

Question 63

Based on the production data for Pat's Pizza Parlor in the above table, which worker has the largest marginal product?

A) Worker 1
B) Worker 2
C) Worker 3
D) Worker 4

Question 64

Based on the above production data table for Ken's Pizza Parlor, we know that the average product of labor curve begins to decrease after hiring worker ________.

A) 1
B) 2
C) 3
D) 4

Question 65

The steeper the slope of the total product curve, the

A) larger is the marginal product of labor.
B) smaller is the marginal product of labor.
C) higher is the level of the total cost curve.
D) more efficient is the technology employed.

Question 66

Based on the production data for Pat's Pizza Parlor in the above table, which of the following pair of workers have the same average product?

A) 1 and 2
B) 2 and 4
C) 1 and 5
D) 2 and 5

Question 67

At point d in the above figure, the average product of labor equals

A) 15.
B) 4.
C) 3.75.
D) approximately 1.

Question 68

In the above figure, an unattainable point is

A) a.
B) e.
C) g.
D) f.

Question 69

In the above figure, after the second worker is hired, the marginal product of labor is

A) increasing.
B) diminishing.
C) constant.
D) zero.

Question 70

At point e in the above figure, the marginal product of labor

A) is less than the average product of labor.
B) equals the average product of labor.
C) is greater than the average product of labor.
D) is at its maximum.

Question 71

In the above figure, the most efficient way to produce 10 units is to hire

A) 1 worker.
B) 2 workers.
C) 3 workers.
D) 5 workers.

Question 72

In the above figure, the maximum number of units that 4 workers can produce is

A) 5 units.
B) 10 units.
C) 15 units.
D) more than 15 units.

Question 73

In the above figure, the marginal product of labor is zero at point

A) a.
B) c.
C) e.
D) f.

Question 74

In the figure above, the marginal product of the second worker is

A) 10 units.
B) 5 units.
C) 2 units.
D) 1 units.

Question 75

In the above figure, the most efficient way to produce 15 units is to hire

A) 2 workers.
B) 3 workers.
C) 4 workers.
D) 5 workers.

Question 76

At that amount of output where diminishing marginal returns first sets in

A) total product will begin to decline.
B) average product will begin to decline.
C) marginal product will begin to decline.
D) all of the above

Question 77

In the above figure, the average product of labor at point c is

A) 10.
B) 5.
C) 2.
D) None of the above answers is correct.

Question 78

In the above figure, a technologically inefficient point is

A) a.
B) e.
C) g.
D) f.

Question 79

In the figure above, ________ is a technologically efficient point.

A) d
B) f
C) g
D) None of the selections is correct.

Question 80

Based on the production data for Pat's Pizza Parlor in the above table, the average product of labor when 4 workers are hired is ________ pizzas.

A) 8
B) 10
C) 11.25
D) 45