Question 1

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first two workers?
A) 15 cookies
B) 20 cookies
C) 17.5 cookies
D) 35 cookies

Accepted Answer

The average product of the first two workers is calculated by dividing the total output of the first two workers (35 cookies) by the number of workers (2), which equals 17.5 cookies.

Question 2

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 50 cookies together. What is the marginal product of the 3rd worker?
A) 20 cookies
B) 15 cookies
C) 50 cookies
D) 35 cookies

Accepted Answer

Let's assume that the marginal product of the 1st worker is MP1, the marginal product of the 2nd worker is MP2, and the marginal product of the 3rd worker is MP3.

According to the information given, we can write:

MP1 = 15 cookies
MP1 + MP2 = 35 cookies
MP1 + MP2 + MP3 = 50 cookies

Subtracting the first equation from the second equation, we get:

MP2 = 20 cookies

Subtracting the second equation from the third equation, we get:

MP3 = 15 cookies

Therefore, the marginal product of the 3rd worker is 15 cookies, which is option B.

As for the best choice, it's not clear what the question is asking for. If we're asked to find the optimal number of workers to maximize production efficiency, we would need more information such as the cost of labor and the revenue earned from selling cookies. Without this information, we cannot make a recommendation.

Question 3

If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that
A) the total output curve increases from workers 1-89, decreases from workers 90-189, and becomes 0 at the 190th worker.
B) the total output curve is increasing at an increasing rate from workers 1-89, then increases at a decreasing rate until the 190th worker, after which it decreases.
C) the total output curve is increasing throughout, although at an increasing rate for the first 190 workers and at a decreasing rate after the 190th worker.
D) diminishing marginal product sets in with the 190th worker.

Accepted Answer

The marginal product curve represents the change in output that results from employing one more unit of labor. When the marginal product is increasing (workers 1-89), it means that each additional worker is adding more to the total output than the previous worker, indicating that the total output curve is increasing at an increasing rate. When the marginal product starts to decrease (after the 89th worker), each additional worker still contributes to the total output, but less so than the worker before, meaning the total output curve is still increasing but at a decreasing rate. The total output does not decrease after the 190th worker; it simply increases at a slower rate until the marginal product hits zero, at which point the total output reaches its maximum.

Question 4

Suppose that one worker can produce 15 cookies, two workers can produce 40 cookies together, and three workers can produce 75 cookies together. What is the marginal product of the 2nd worker?
A) 20 cookies
B) 25 cookies
C) 35 cookies
D) 40 cookies

Accepted Answer

We can find the marginal product of the second worker by calculating the difference in output between when one worker produces and when two workers produce.

Marginal product of second worker = (output when two workers produce – output when one worker produces) / 1

Marginal product of second worker = (40 – 15) / 1

Marginal product of second worker = 25

Therefore, the answer is B: 25 cookies.

As for the best choice, it would depend on the context of the problem and what decision is being made. If the decision is about how many workers to hire for cookie production, then the marginal product of the second worker would be an important factor to consider. The additional output provided by the second worker is significant (25 cookies), so it may be beneficial to hire the second worker. However, other factors such as wages, total production costs, and demand for cookies would need to be considered as well.

Question 5

Marginal physical product of the first worker is 100, 120 for the second, 80 for the third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth, and 0 for the ninth. What is total product for the fifth worker and the ninth worker respectively?
A) 335; 341
B) 335; 0
C) 5; 0
D) 0; 5

Accepted Answer

The total product for the fifth worker is the sum of the marginal products of all workers up to the fifth, which is 100 + 120 + 80 + 30 + 5 = 335. For the ninth worker, it includes the marginal products of all workers up to the ninth, which adds up to 335 + 3 + 2 + 1 + 0 = 341.

Question 6

The concept of the production function implies that a firm using resources inefficiently will
A) obtain less output than the theoretical production function shows.
B) obtain more output than the theoretical production function shows.
C) obtain exactly the amount that the theoretical production function shows.
D) not be subject to diminishing marginal product.

Accepted Answer

The production function shows the maximum possible output that can be produced with given inputs. If a firm is using its resources inefficiently, it will obtain less output than the theoretical production function shows. This is because the production function assumes all inputs are used efficiently, and if they are not, then output will be lower than what the function predicts.

Question 7

A negative value for the marginal physical product would indicate that
A) the company has not yet reached the point of saturation.
B) total output increased by a significant amount.
C) total output decreased when the extra unit of the variable input was added.
D) total output increased, but the increase was very small.

Accepted Answer

A negative value for the marginal physical product indicates that the addition of one more unit of the variable input results in a decrease in total output. Therefore, choice C is the best answer. Choices A, B, and D are incorrect because they describe situations where total output either increased or remained the same.

Question 8

When a firm uses technological improvements to increase output from the same amount of inputs, the result is
A) a new production function.
B) losses.
C) guaranteed profits.
D) diseconomies of scale.

Accepted Answer

Technological improvements increase productivity, which means the firm can produce more output from the same amount of inputs. This results in a shift in the production function, allowing the firm to produce more using the same or lower costs. This can lead to economies of scale, which can result in higher profits for the firm.

Question 9

Will's Franks originally sold hotdogs and soft drinks from a cart located in front of City Hall. Then Will purchased another hotdog cart and hired someone to sell hotdogs and soft drinks near the high school. Both locations have been successful. When Will's Franks expanded to two locations, which of the following did NOT occur?
A) Will's production function changed.
B) Production increased.
C) The company increased the inputs it employs.
D) The firm employed additional capital.

Accepted Answer

The expansion of locations did not necessarily mean a change in Will's Franks production function. The production function involves the relationship between inputs (such as labor and capital) and outputs (such as hotdogs sold). The addition of a new location does not necessarily change this relationship.

Question 10

The production function
A) shows the maximum level of output for a given set of inputs.
B) is an economic relationship between revenue and cost.
C) shows the relationship between input prices and amount of input used.
D) always shows increasing marginal product of labor.

Accepted Answer

The production function shows the maximum level of output that can be produced using a given set of inputs, taking into account fixed and variable inputs. It depicts the relationship between inputs and outputs, and can be used to determine the optimal combination of inputs to achieve the desired level of output. It does not necessarily imply anything about revenue or cost, nor does it always exhibit increasing marginal product of labor.

Question 11

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first three workers?
A) 25 cookies
B) 30 cookies
C) 17.5 cookies
D) 20 cookies

Accepted Answer

The average product of the first three workers is calculated by dividing the total output by the number of workers. Here, three workers produce 60 cookies together, so the average product is 60 cookies / 3 workers = 20 cookies per worker.

Question 12

If marginal product is negative, then
A) total product is rising.
B) total product is falling.
C) marginal cost is falling.
D) average profit is rising.

Accepted Answer

If marginal product is negative, it means that each additional input of labor or capital is reducing the total output. This implies that total product is falling.

Question 13

If in the short run total product is decreasing as more workers are hired, then the marginal physical product is
A) increasing.
B) zero.
C) negative.
D) positive.

Accepted Answer

When the total product decreases as more workers are hired, it means that the additional output produced by each additional worker is less than the previous worker. This means that the marginal physical product is negative.

Question 14

Changes in production functions are associated with changes in
A) the level of output.
B) demand.
C) the levels of costs.
D) technology.

Accepted Answer

Changes in production functions are primarily associated with changes in technology, such as new machinery, tools or processes. This can lead to improvements in productivity and efficiency, but may also result in changes to the level of output and costs. Demand may also influence changes in production, but it is not directly associated with changes in production functions.

Question 15

When total product is rising
A) fixed cost must be rising.
B) marginal product must be positive.
C) variable cost must be declining.
D) marginal product must be negative.

Accepted Answer

When total product is rising, it means that the output or quantity of production is increasing. Marginal product refers to the additional output that can be produced by adding one more unit of an input (labor, capital, etc.). Therefore, if total product is rising, it must be that marginal product is positive, indicating that each additional unit of input is contributing to an increase in output. Fixed cost refers to costs that do not vary with the level of production, so they are not necessarily rising when total product is rising. Variable cost refers to costs that do vary with the level of production, but they may or may not be declining depending on the specific situation. Lastly, marginal product cannot be negative when total product is rising, as that would mean that adding more input would be reducing output, which is counterintuitive.

Question 16

Which of the following changes a firm's production function?
A) hiring additional workers
B) acquiring additional physical capital
C) adding a second production facility exactly like its first production site
D) adopting new technology

Accepted Answer

Adopting new technology can significantly change a firm's production function by increasing productivity, improving efficiency, and enabling the production of new products. Hiring additional workers (A) and acquiring additional physical capital (B) can increase output in the short run, but they do not necessarily change the production function. Adding a second production facility (C) can increase capacity, but it does not necessarily change the production function unless the facility is built with new technology or a different production process.

Question 17

"In economics, the short run commonly refers to a period within one year and the long run is a period longer than one year." Do you agree or disagree? Explain your answer.

Accepted Answer

The answer of "In economics, the short run commonly refers...

Question 18

-In the above table, average product is 30 tablets when
A) 4 workers are employed.
B) 3 workers are employed.
C) 2 workers are employed.
D) 1 worker is employed.

Accepted Answer

The answer of 
-In the above table, average product is...

Question 19

Which of the following statements is FALSE?
A) Included in the firm's short-run production function are both fixed and variable inputs.
B) An efficient firm can obtain more output than the production function shows.
C) The production function shows the technical relationship between a firm's inputs and outputs.
D) The production function presents the technically efficient methods of combining inputs to produce output.

Accepted Answer

An efficient firm cannot obtain more output than the production function shows because the production function represents the maximum amount of output that can be produced with a given set of inputs. Efficiency means producing the maximum amount of output from a given set of inputs, not exceeding it.

Question 20

Production functions indicate the relationship between
A) factor costs and output prices.
B) factor inputs and the quantity of output.
C) the value of inputs and average costs.
D) factor inputs and factor prices.

Accepted Answer

Production functions show how much output can be produced from a given set of inputs. In other words, they illustrate the relationship between factor inputs (such as labor and capital) and the quantity of output that can be produced.

Quiz 22: The Firm: Cost and Output Determination

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first two workers?

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 50 cookies together. What is the marginal product of the 3rd worker?

If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that

Suppose that one worker can produce 15 cookies, two workers can produce 40 cookies together, and three workers can produce 75 cookies together. What is the marginal product of the 2nd worker?

Marginal physical product of the first worker is 100, 120 for the second, 80 for the third, 30 for the fourth, 5 for the fifth, 3 for the sixth, 2 for the seventh, 1 for the eighth, and 0 for the ninth. What is total product for the fifth worker and the ninth worker respectively?

The concept of the production function implies that a firm using resources inefficiently will

A negative value for the marginal physical product would indicate that

When a firm uses technological improvements to increase output from the same amount of inputs, the result is

The production function

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 60 cookies together. What is the average product of the first three workers?

If marginal product is negative, then

If in the short run total product is decreasing as more workers are hired, then the marginal physical product is

Changes in production functions are associated with changes in

When total product is rising

Which of the following changes a firm's production function?

"In economics, the short run commonly refers to a period within one year and the long run is a period longer than one year." Do you agree or disagree? Explain your answer.

-In the above table, average product is 30 tablets when

Which of the following statements is FALSE?

Production functions indicate the relationship between