Deck 29: Production Theory Supply

Question 1

Whats defention of terms:
-constant returns to scale

Answer 1

occurs if output increases by the same proportion as all inputs, e.g., a tripling of inputs leads to a tripling of output

Question 2

Whats defention of terms:
-decreasing returns to scale

Answer 2

occurs when output increases by less than inputs; for example if inputs triple but output only doubles

Question 3

Whats defention of terms:
-increasing returns to scale

Answer 3

increase in output such that output increases proportionally more than inputs; doubling of inputs causes output to triple

Question 4

Whats defention of terms:
-law of diminishing returns

Question 5

Whats defention of terms:
-long run

Question 6

Whats defention of terms:
-mass production

Question 7

Whats defention of terms:
-process technology

Question 8

Whats defention of terms:
-product technology

Question 9

Whats defention of terms:
-production function

Question 10

Whats defention of terms:
-production in the long run

Question 11

Whats defention of terms:
-production in the short run

Question 12

Whats defention of terms:
-returns to scale

Question 13

Whats defention of terms:
-average product of labor

Question 14

Whats defention of terms:
-capital/labor ratio

Question 15

Whats defention of terms:
-diminishing marginal productivity

Question 16

Whats defention of terms:
-increasing marginal productivity

Question 17

Whats defention of terms:
-negative marginal productivity

Question 18

Whats defention of terms:
-marginal product of labor

Question 19

Whats defention of terms:
-total product

Question 20

Describe inputs into production and use the production function to illustrate the relationships among factors of production and technology.
-List the four broad categories of factors of production or inputs to production. How are they represented in a production function?

Question 21

Describe inputs into production and use the production function to illustrate the relationships among factors of production and technology.
-What is the role of technology in production?

Question 22

Explain the difference between production in the short run and production in the long run.
-What is the difference between the short-run and long-run? Is there a fixed time period associated with short-run and long-run? Explain why or why not.

Question 23

Explain the difference between production in the short run and production in the long run.
-What happens to output in the short-run as production increases? What inputs are "fixed" and which input is variable in the short-run? How does this explain diminishing marginal productivity?

Question 24

Explain the difference between production in the short run and production in the long run.
-What might happen to output in the long-run as the number of inputs is increased? Are there any fixed inputs in the long-run?

Question 25

Describe challenges faced by U.S. businesses as they make production decisions.
-Compare and contrast product technology and process technology.

Question 26

Describe challenges faced by U.S. businesses as they make production decisions.
-Describe how a competitive advantage can erode over time.

Question 27

Discuss the critiques of the neoclassical notion of production and factors of production.
-Compare and contrast the traditional and progressive view of labor as an input into ?production.

Question 28

Discuss the critiques of the neoclassical notion of production and factors of production.
-What are the issues raised about the traditional treatment of technology in production?

Question 29

Calculate various measures of productivity and explain what they mean.
-Explain in words what the marginal productivity of labor and average productivity of labor measures and why this is important information for the owner of a business.

Question 30

Calculate various measures of productivity and explain what they mean.
-Why does marginal productivity rise and then fall in the short-run?

Question 31

Understand the relationships of the measures of productivity.
-Explain why diminishing marginal productivity eventually causes average productivity to fall.

Question 32

Understand the relationships of the measures of productivity.
-Sketch a graph of marginal productivity and average productivity. Label the point where MP = 0 and AP = 0.

Question 33

Explain diminishing marginal productivity and how it is measured.
-Why do the additions to output fall after a certain number of workers in the short-run

Question 34

Explain diminishing marginal productivity and how it is measured.
-When marginal productivity 'increases at a decreasing rate,' what part of the marginal productivity curve are we referring to? What does that mean?

Question 35

Traditional economics recognizes four broad categories or factors of production. These include:

A) land, natural resources, labor, entrepreneurship.
B) land, technology, labor, capital.
C) land, labor, capital, entrepreneurship.
D) land, capital, entrepreneurship, and natural resources.

Question 36

What is the definition of "the short run" in economics?

A) the short run is one year or less.
B) the short run is the period of time when at least one input is fixed.
C) the short run is the period of time when all inputs are variable.
D) the short run is the current accounting period.

Question 37

A production function is

A) a statement of the relationship between the inputs and the outputs.
B) the application of knowledge to create new goods and services.
C) the period of time in which at least one factor of production is fixed.
D) refers to long run changes in output that occur when the firm proportionally increases all factors of production.

Question 38

The law of diminishing returns refers to

A) the fact that people get less and less enjoyment from each additional unit of a good consumers.
B) the fact that the longer you work at something, the less effective you are.
C) the fact that, in the short run, output will tend to increase at a decreasing rate as additional inputs are added.
D) the fact that output will tend to decline as additional inputs are added and at least one input is fixed.

Question 39

Neoclassical economists argue that most production processes go through three stages of production. These are:

A) the first, second, and third stage.
B) the beginning, the middle, and the last stage.
C) the stage of increasing marginal returns, diminishing marginal returns, and negative marginal returns,
D) the stage of increasing marginal returns, zero marginal returns, and decreasing marginal returns.

Question 40

What is the difference between "diminishing marginal returns" and "decreasing returns to scale?"

A) diminishing marginal returns refers to production in the short run whereas decreasing returns to scale refers to production in the long run.
B) diminishing marginal returns refers to production in the long run whereas decreasing returns to scale refers to production in the short run.
C) diminishing marginal returns means that output decreases whereas decreasing returns to scale means that sales revenue decreases.
D) there is no difference.

Question 41

A firm that is experiencing increasing returns to scale will

A) want to reduce the level of output in order to reduce unit costs.
B) want to increase the level of output in order to reduce unit costs.
C) want to maintain the level of output in order to increase profits.
D) want to consider changing to a new line of work.

Question 42

The progressive critique of neoclassical production theory argues that labor

A) is not an input to production.
B) will work more or less intensely depending on a variety of factors.
C) will not produce diminishing marginal returns.
D) is generally more effective than a machine.

Question 43

Progressives argue that the assumption of diminishing marginal returns

A) is a reliable guide to understanding modern industry.
B) tends to be overwhelmed by changes in technology.
C) only applies to labor intensive industries.
D) is true of manufacturing but not agricultural industries.

Question 44

Henry Ford's Model T is significant in economic history because

A) it was a really beautiful car.
B) it was mass produced on an assembly line using standardized parts.
C) it was an expensive but extremely reliable automobile.
D) it was a custom made, carefully crafted automobile purchased primarily by the wealthy.

Question 45

-The data in Table 29.1a describes

A) production in the long run
B) production in the short run.
C) constant returns to scale.
D) diminishing marginal utility.

Question 46

-In Table 29.1a, when output is 270, the average product of labor is

A) 27
B) 30
C) 45
D) 50

Question 47

-In Table 29.1a, at what point does diminishing marginal returns set in?

A) when the second worker is added.
B) when the third worker is added.
C) when the fourth worker is added.
D) when the fifth worker is added.

Question 48

-In Table 29.1a, at what point does output enter the stage of negative marginal returns?

A) when the fifth worker is added.
B) when the 9^th worker is added.
C) the point of negative marginal returns is not indicated in the table.
D) when the third worker is added.

Question 49

-In Table 29.1a, the marginal product of the 9^th worker is

A) 10
B) 9
C) 0
D) cannot be determined from the data.

Question 50

Sam currently has a cumulative 3.5 grade point average. This semester he expects to earn a 2.5 grade point average. Which of the following is true.

A) Sam's cumulative grade point average will go up.
B) Sam's cumulative grade point average will stay the same.
C) Sam's cumulative grade point average will go down.
D) It depends on how many courses he is taking this semester.