Question 1

When the slope of the total production curve begins to flatten:

Accepted Answer

All of the statements accurately describe the situation when the slope of the total production curve begins to flatten. This indicates diminishing marginal product, where each additional unit of input contributes less to the total output than the previous unit, leading to a decrease in marginal product.

Question 2

The total cost curve:

Accepted Answer

The total cost curve represents the total cost of production, which includes both fixed and variable costs. Therefore, it is the sum of the variable cost curve and the fixed cost curve (A), is parallel to the variable cost curve because fixed costs do not change with output, making the distance between the total cost curve and variable cost curve constant (B), and always lies above the variable cost curve because it includes fixed costs in addition to variable costs (C).

Question 3

Suppose that an accounting firm with 10 employees hires another accountant. By doing so, it goes from serving 30 customers each week to serving 32 customers each week. What is the marginal product of labor for the new accountant?

Accepted Answer

The marginal product of labor refers to the additional output (in this case, customers served) that results from adding one more unit of labor (in this case, one more accountant). The firm increased its service from 30 to 32 customers with the addition of one accountant, so the marginal product of labor is 32 - 30 = 2.

Question 4

The fixed cost curve:

Accepted Answer

Fixed costs do not change with the level of output, so the fixed cost curve is a constant, flat line, representing that these costs are the same regardless of the quantity produced.

Question 5

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20^th worker:

Accepted Answer

The marginal product of the 20th worker is the difference in output when the worker is added, which is 1,000 - 912 = 88 cigars.

Question 6

Diminishing marginal product:

Accepted Answer

Diminishing marginal product implies that as more units of a variable input are added to fixed inputs, the additional output produced by each new unit of input decreases. This leads to an increase in the variable cost per additional unit of output, causing the variable cost curve to become steeper as more units are produced.

Question 7

A jewelry company has three employees who together produce 10 bracelets an hour. When a fourth worker joins them, the output for the company increases to 11 bracelets an hour. Which of the following is true?

Accepted Answer

The total product is increasing because the addition of the fourth worker increases the total output from 10 to 11 bracelets an hour.

Question 8

When the slope of the total production curve steepens:

Accepted Answer

When the slope of the total production curve steepens, it indicates that the output is increasing at an increasing rate, which means the marginal product is increasing.

Question 9

In general, the cost of an input _____ when a firm has reached the point of diminishing marginal product.

Accepted Answer

When a firm reaches the point of diminishing marginal product, the cost of an input typically stays the same, but the additional output produced by each additional unit of input decreases.

Question 10

Total costs:

Accepted Answer

Total costs encompass both fixed and variable costs, as well as explicit and implicit costs, and they increase as a firm's output increases.

Question 11

Average fixed costs:

Accepted Answer

Average fixed costs decrease as output increases because the total fixed costs are spread over a larger number of units, leading to a lower average fixed cost per unit.

Question 12

Assume a snowboard company is at a point in production at which marginal product is below average product. Which of the following must be true?

Accepted Answer

When marginal product is below average product, it implies that adding more units of input is increasing output at a decreasing rate, which is a sign of diminishing marginal product. This also means the average product is falling because the addition of more units of input is not increasing output as efficiently as before.

Question 13

The slope of the total production curve becomes _____ when marginal product _____, typically at _____ levels of input.

Accepted Answer

The slope of the total production curve becomes steeper when the marginal product increases, which typically happens at lower levels of input. This is because, at low levels of input, adding an additional unit of input usually results in a relatively large increase in output.

Question 14

Average product measures:

Accepted Answer

Average product measures the quantity of output produced per unit of input, reflecting the efficiency of input use. Choices B and C describe marginal product, not average product.

Question 15

Suppose a sandwich shop currently employs four workers and the shop produces 12 sandwiches an hour. A fifth worker is hired, and the shop now produces 15 sandwiches per hour. Which of the following is true?

Accepted Answer

The marginal product of the fifth worker is the additional output produced by that worker, which is the increase from 12 to 15 sandwiches per hour, or 3 sandwiches. Choices B and C are not supported by the information provided.

Question 16

A soft drink factory employs seven workers and produces 500 bottles of soda a day. When the company reduces the workforce to six workers output decreases to 450 bottles a day. The seventh worker:

Accepted Answer

The seventh worker had a marginal product of 50 bottles (500 - 450), which is lower than the average product when there were six workers (450/6 = 75), causing the average product to fall. Thus, all statements are correct.

Question 17

The average product curve tells us:

Accepted Answer

The average product curve shows the output per unit of input, indicating the level of inputs that are the most productive.

Question 18

Assume a company is at a point in production at which marginal product is above average product. Which of the following must be true?

Accepted Answer

When marginal product is above average product, it means that the additional output from one more unit of input is higher than the average output per unit of input so far. This causes the average product to increase because the marginal product is pulling the average upwards.

Question 19

When marginal product _____ average product, average product must be _____.

Accepted Answer

When the marginal product is greater than the average product, it means that the addition of the last unit of input is contributing more to the total output than the average of the previous units. This causes the average product to increase because the overall efficiency per unit of input is going up.

Question 20

The marginal product curve:

Accepted Answer

The marginal product curve shows the additional output produced as a result of adding one more unit of input, reflecting the concept of diminishing returns in the context of production.

Quiz 12: The Costs of Production

When the slope of the total production curve begins to flatten:

The total cost curve:

Suppose that an accounting firm with 10 employees hires another accountant. By doing so, it goes from serving 30 customers each week to serving 32 customers each week. What is the marginal product of labor for the new accountant?

The fixed cost curve:

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20^th worker:

Diminishing marginal product:

A jewelry company has three employees who together produce 10 bracelets an hour. When a fourth worker joins them, the output for the company increases to 11 bracelets an hour. Which of the following is true?

When the slope of the total production curve steepens:

In general, the cost of an input _____ when a firm has reached the point of diminishing marginal product.

Total costs:

Average fixed costs:

Assume a snowboard company is at a point in production at which marginal product is below average product. Which of the following must be true?

The slope of the total production curve becomes ___ when marginal product _, typically at ___ levels of input.

Average product measures:

Suppose a sandwich shop currently employs four workers and the shop produces 12 sandwiches an hour. A fifth worker is hired, and the shop now produces 15 sandwiches per hour. Which of the following is true?

A soft drink factory employs seven workers and produces 500 bottles of soda a day. When the company reduces the workforce to six workers output decreases to 450 bottles a day. The seventh worker:

The average product curve tells us:

Assume a company is at a point in production at which marginal product is above average product. Which of the following must be true?

When marginal product _ average product, average product must be _.

The marginal product curve:

Quiz 12: The Costs of Production

When the slope of the total production curve begins to flatten:

The total cost curve:

Suppose that an accounting firm with 10 employees hires another accountant. By doing so, it goes from serving 30 customers each week to serving 32 customers each week. What is the marginal product of labor for the new accountant?

The fixed cost curve:

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20th worker:

Diminishing marginal product:

A jewelry company has three employees who together produce 10 bracelets an hour. When a fourth worker joins them, the output for the company increases to 11 bracelets an hour. Which of the following is true?

When the slope of the total production curve steepens:

In general, the cost of an input _____ when a firm has reached the point of diminishing marginal product.

Total costs:

Average fixed costs:

Assume a snowboard company is at a point in production at which marginal product is below average product. Which of the following must be true?

The slope of the total production curve becomes _____ when marginal product _____, typically at _____ levels of input.

Average product measures:

Suppose a sandwich shop currently employs four workers and the shop produces 12 sandwiches an hour. A fifth worker is hired, and the shop now produces 15 sandwiches per hour. Which of the following is true?

A soft drink factory employs seven workers and produces 500 bottles of soda a day. When the company reduces the workforce to six workers output decreases to 450 bottles a day. The seventh worker:

The average product curve tells us:

Assume a company is at a point in production at which marginal product is above average product. Which of the following must be true?

When marginal product _____ average product, average product must be _____.

The marginal product curve:

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20^th worker:

The slope of the total production curve becomes ___ when marginal product _, typically at ___ levels of input.

When marginal product _ average product, average product must be _.