Question 1

The marginal product of labor is calculated using the formula
A) L/Q.
B) ΔL/ΔQ.
C) ΔQ/ΔL.
D) Q/L.

Accepted Answer

The answer of The marginal product of labor is calculated...

Question 2

If production displays increasing marginal returns, then
A) total product rises by a constant amount throughout.
B) each new worker hired adds more to output than previous hires.
C) the firm must be adding new capital to keep boosting productivity.
D) total product reaches a maximum sooner than if production displayed decreasing returns.

Accepted Answer

Increasing marginal returns means that each new worker is adding more to output than previous hires, leading to a rapid increase in total product. This is due to the fact that the fixed inputs of the production process (such as capital and technology) are being used more efficiently with each additional worker.

Question 3

If average product is decreasing, then marginal product must be negative.

Accepted Answer

The statement is not necessarily true. It is possible for the marginal product to be positive but decreasing, causing the average product to decrease. However, if both the marginal and average products are decreasing, then the marginal product must eventually become negative.

Question 4

A downward-sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

Accepted Answer

The law of diminishing marginal returns states that as more units of a variable input (such as labor) are added to a fixed input (such as capital), the marginal product of that variable input will eventually decrease. This is illustrated by a downward-sloping marginal product of labor curve.

Question 5

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Accepted Answer

If adding an additional worker causes a decrease in output, it means that the marginal product of the last worker hired (in this case, the 6th worker) is negative.

Question 6

Table 11-3
 
-Refer to Table 11-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed. The average product of labor will equal 60 boxes when Manny hires
A) the second worker.
B) the third worker.
C) the fourth worker.
D) the fifth worker.

Accepted Answer

The answer of Table 11-3
 
-Refer to Table 11-3. The...

Question 7

Sam Lewis owns a firm in New York City's garment district. If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way. At this point
A) the marginal product of labor in Sam's business would be negative and his total output would decrease.
B) Sam should encourage his workers to share their sewing machines.
C) Sam's business will be in violation of safety rules that have been established by the New York City government.
D) Sam should begin using a division of labor in his business.

Accepted Answer

The principle of diminishing marginal returns states that as more units of a variable input, such as labor, are added to a fixed input, such as sewing machines, eventually the marginal product of that variable input will decrease. If Sam keeps adding workers without adding more sewing machines, eventually the workplace will become too crowded and the workers will get in each other's way. At this point, the marginal product of labor will be negative and Sam's total output will decrease. Therefore, the best choice is A.

Question 8

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of
A) the marginal product of labor.
B) the division of labor.
C) the average product of labor.
D) the average cost of production.

Accepted Answer

The definition given in the question is of the average product of labor, which is the total output produced by a firm divided by the quantity of workers employed by the firm. The marginal product of labor is the additional output produced when one more unit of labor is added, while the division of labor refers to the specialization of tasks among different workers. The average cost of production is the total cost of production divided by the quantity produced.

Question 9

If a firm experiences diminishing returns its marginal product must be negative.

Accepted Answer

Diminishing returns means that the marginal product is decreasing, but it can still be positive. It only becomes negative when the total product starts to decrease.

Question 10

Which of the following statements is true?
A) The average product of labor is at its maximum when the average product of labor equals the marginal product of labor.
B) The average product of labor is at its minimum when the average product of labor equals the marginal product of labor.
C) The average product of labor tells us how much output changes as the quantity of workers hired changes.
D) Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing.

Accepted Answer

The average product of labor is at its maximum when the average product of labor equals the marginal product of labor. This is because the slope of the average product of labor curve equals the marginal product of labor at the point of maximum average product of labor.

Question 11

Table 11-3
 
-Refer to Table 11-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed. The highest value of the average product is labor is ________ when Manny hires ________ workers.
A) 80; 3
B) 100; 3
C) 100; 2
D) 80; 4

Accepted Answer

The average product of labor is computed as the total output divided by the number of workers. The highest value of the average product of labor occurs when the marginal product of labor equals the average product. From the table, we can see that the marginal product of labor decreases after the second worker is hired. Therefore, the highest value of the average product of labor must occur at some point between the first and second worker. Only option C satisfies this condition, where the average product of labor is 100 and Manny hires 2 workers.

Question 12

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?
A) the relationship between the marginal and average product of labor
B) the law of diminishing returns
C) why no firm would want to hire so many workers as to experience a negative marginal product of labor
D) the division of labor

Accepted Answer

Adam Smith used the example of a pin factory to illustrate the concept of division of labor, which is the separation of a production process into specialized tasks. He explained how division of labor increased productivity and efficiency in the production process, leading to economic growth and higher standards of living.

Question 13

If marginal product is equal to average product, then total product is at a maximum.

Accepted Answer

If marginal product is equal to average product, total product is neither increasing nor decreasing, meaning it has reached its maximum point but it doesn't necessarily mean that it is at the maximum point. The maximum point occurs when marginal product begins to decline, causing total product to decrease.

Question 14

Which of the following describes how output changes in the short run? Because of specialization and the division of labor, as more workers are hired
A) output will first increase at an increasing rate, then output will increase at a decreasing rate.
B) output will first decrease at an increasing rate, then increase at a decreasing rate.
C) the marginal product of labor will first decrease, then increase at a decreasing rate.
D) the marginal product of labor will first be negative and then will be positive.

Accepted Answer

In the short run, as more workers are hired, output will initially increase at an increasing rate due to specialization and division of labor. However, as the number of workers increases, the marginal product of labor will eventually decrease and output will increase at a decreasing rate. This is because the fixed input, such as machinery or workspace, limits the amount of output that can be produced, and adding more workers leads to decreasing returns to scale.

Question 15

If marginal product is greater than average product, then
A) average product must be decreasing.
B) marginal product must be decreasing.
C) marginal product must be increasing.
D) marginal product could either be increasing or decreasing.

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 all units before it. This situation does not specify whether the marginal product itself is increasing or decreasing; it only indicates its position relative to the average product.

Question 16

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

Accepted Answer

This is an accurate definition of marginal product of labor.

Question 17

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?
A) 0.16
B) 3
C) 4.67
D) 36

Accepted Answer

The answer of If 11 workers can produce 53 units...

Question 18

Table 11-3
 
-Refer to Table 11-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed. Diminishing returns to labor are first observed in this example after Manny hires the ________ worker.
A) second
B) third
C) fourth
D) fifth

Accepted Answer

Looking at the table, the number of boxes produced per day increases as more workers are hired up to the third worker. After the third worker is hired, the additional boxes produced per worker decreases, indicating diminishing returns to labor. Therefore, the correct answer is B)third.

Question 19

After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?
A) The marginal product of the 8th worker is negative.
B) The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired.
C) Suzie's profits would be greater if she did not hire the 8th worker.
D) The average product of labor is negative.

Accepted Answer

When the average product of labor declines after hiring the 8th worker, it means that the marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. The other options are not necessarily true based on the information given.

Question 20

The division of labor and specialization explain
A) why, when the marginal product of labor increases, so does the average product of labor.
B) why the average product of labor falls when firms use more capital or change the layout of their businesses.
C) why the marginal product of labor rises as a firm hires its first units of labor.
D) why firms may find it profitable to use more workers when the marginal product of labor is negative.

Accepted Answer

The division of labor and specialization allows workers to focus on specific tasks, leading to increased efficiency and productivity. When a firm hires its first units of labor, the division of labor allows each worker to specialize in their respective tasks, which increases the marginal product of labor. As more workers are hired, however, there may be a point of diminishing returns where the average product of labor falls, as the additional workers may not be as specialized or efficient as the initial workers. Therefore, choice C is the best option.

Quiz 11: Technology, Production, and Costs

The marginal product of labor is calculated using the formula

If production displays increasing marginal returns, then

If average product is decreasing, then marginal product must be negative.

A downward-sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Sam Lewis owns a firm in New York City's garment district. If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way. At this point

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

If a firm experiences diminishing returns its marginal product must be negative.

Which of the following statements is true?

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

If marginal product is equal to average product, then total product is at a maximum.

Which of the following describes how output changes in the short run? Because of specialization and the division of labor, as more workers are hired

If marginal product is greater than average product, then

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?

After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?

The division of labor and specialization explain