45) 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.
46) 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.
47) 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.
48) In the above figure, the marginal product of labor is zero at point
A) a.
B) c.
C) e.
D) f.
49) 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.
50) 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.
51) 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.
52) 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.
53) 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
54) “Diminishing marginal returns” refer to a situation in which the
A) marginal cost of the next worker hired is less than the marginal cost of the previous worker
hired.
B) average cost of the next worker hired is less than the average cost of the previous worker
hired.
C) marginal product of the next worker hired is less than the marginal product of the previous
worker hired.
D) average product of the next worker hired is less than the average product of the previous
worker hired.
55) A firm’s total product curve shows that at first it has
A) economies of scale and then diseconomies of scale.
B) diseconomies of scale and then economies of scale.
C) increasing marginal returns and then diminishing marginal returns.
D) diminishing marginal returns and then increasing marginal returns.
56) Diminishing marginal returns to labor occur because
A) after a while it is hard to find a good worker.
B) the capital resources used by the firm are fixed in the short run.
C) workers become more efficient over time.
D) larger companies are less efficient.
57) Which of the following statements regarding the marginal product curve is FALSE?
A) Increasing marginal returns occur only when the total product increases as the number of
workers increases.
B) Increasing marginal returns is due to greater efficiency from specialization in the production
process.
C) The law of diminishing returns applies in the short run.
D) Along the marginal product curve, increasing marginal returns occur first and then
diminishing marginal returns.
58) Diminishing marginal returns occur when
A) the average product of the variable input eventually diminishes.
B) the marginal product of an additional worker is less than the marginal product of the previous
worker hired.
C) the firm hires cheap, less-skilled workers in place of expensive, high-skilled workers.
D) total product diminishes.
59) The law of diminishing returns states that as
A) the size of a plant increases, the firm’s fixed cost decreases.
B) the size of a plant increases, the firm’s fixed cost increases.
C) a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product
of the variable input eventually diminishes.
D) a firm uses more of a variable input, given the quantity of fixed inputs, the firm’s average
total cost will decrease eventually.
60) The law of diminishing returns states that as a firm increases
A) all the inputs is uses, the marginal product of each of these inputs always decreases.
B) a variable input, with a given quantity of fixed inputs, the firm’s marginal cost eventually
decreases.
C) a variable input, with a given quantity of fixed inputs, the marginal product of the variable
input eventually decreases.
D) a variable input, given the quantity of fixed inputs, the firm’s average total cost will
eventually decrease.
61) The law of diminishing marginal returns says that as the firm uses more of ________, with a
given quantity of ________, the ________ product of the variable input eventually diminishes.
A) a fixed input; variable inputs; marginal
B) all inputs; capital; average
C) a variable input; fixed inputs; average
D) a variable input; fixed inputs; marginal
62) The law of diminishing returns makes it clear that as more a variable input is employed, in
the ________ the marginal product of the variable input eventually will ________.
A) short run; rise
B) long run; rise
C) short run; fall
D) long run; fall
63) The law of diminishing returns occurs because
A) the marginal product of an additional worker is greater than the marginal product of the
previous worker.
B) the marginal product of a variable input, such as labor, depends in part on the amount of fixed
inputs, such as capital.
C) total production decreases as more of the variable inputs are used.
D) adding more and more workers leads to a decrease in the quantity of capital.
64) The law of diminishing returns implies that, with the quantity of capital fixed, as the use of
labor rises
A) total product will fall eventually.
B) the marginal product of labor will fall eventually.
C) the total product of labor will fall below the marginal product of labor.
D) the production process will become technologically inefficient eventually.
Labor
(workers)
Total product
(units)
0
0
5
1000
10
3000
15
4000
20
4500
65) In the above table, between what two levels of output does one first observe the law of
diminishing returns?
A) 0 and 1000
B) 1000 and 3000
C) 3000 and 4000
D) 4000 and 4500
Decent Donuts
Labor
(workers)
Total product
(dozens of donuts per
day)
0
0
1
12
2
26
3
44
4
64
5
86
6
110
7
122
8
125
9
127
10
128
66) Using the table above, what is the marginal product of the 5th worker hired at Decent
Donuts?
A) 86 dozen donuts per day
B) 22 dozen donuts per day
C) 17.2 dozen donuts per day
D) 64 dozen donuts per day
67) Based on the data in the table above, which worker at Decent Donuts has the highest
marginal product?
A) the fourth
B) the fifth
C) the sixth
D) the seventh
68) Based on the data in the table above, what is the average product of labor when Decent
Donuts employs five workers?
A) 16.66 dozen donuts per day
B) 17.2 dozen donuts per day
C) 20 dozen donuts per day
D) 22 dozen donuts per day
69) Based on the data in the table above, when Decent Donuts hires eight workers, the
A) average product of labor is greater than the marginal product.
B) marginal product of labor is greater than the average product.
C) marginal product of labor is equal to the average product.
D) marginal product of labor is not defined.
70) Using the table above, for which of the following levels of employment does the marginal
product of labor exceed the average product of labor at Decent Donuts?
A) four workers
B) seven workers
C) both of the above
D) neither of the above
71) Using the table above, for which of the following levels of employment does the average
product of labor exceed the marginal product of labor at Decent Donuts?
A) ten workers
B) seven workers
C) both of the above
D) neither of the above
72) Based on the data in the table above, after which worker is hired do diminishing marginal
returns begin?
A) the first
B) the fifth
C) the sixth
D) the ninth
Labor
(workers)
Total product
(shirts)
0
0
1
50
2
120
3
180
4
220
5
250
73) The table above shows the short-run product schedule for Virginia’s Tee-Shirts. What is the
marginal product associated with the hiring the fifth worker?
A) 30 shirts
B) 50 shirts
C) 235 shirts
D) 250 shirts
74) The table above shows the short-run product schedule for Virginia’s Tee-Shirts. What is the
average product associated with hiring the fourth worker?
A) 40 shirts
B) 55 shirts
C) 50 shirts
D) 220 shirts
75) The table above shows the short-run product schedule for Virginia’s Tee-Shirts. The worker
for whom the law of diminishing returns initially occurs is the ________ worker.
A) 5th
B) 4th
C) 3rd
D) 2nd
Jefferson’s Cleaners
Labor
(workers)
Total product
(suits cleaned per day)
0
0
1
12
2
26
3
46
4
60
5
73
6
84
7
94
8
102
9
109
76) Based on the above table, what is the marginal product of the 6th worker hired at Jefferson’s
Cleaners?
A) 10 suits per day
B) 11 suits per day
C) 14 suits per day
D) 84 suits per day
77) Using the data in the above table, which worker at Jefferson’s Cleaners has the highest
marginal product?
A) the second
B) the third
C) the fourth
D) the fifth
78) Using the above table, what is the average product of labor when Jefferson’s Cleaners
employs six workers?
A) 11 suits per day
B) 12 suits per day
C) 13 suits per day
D) 14 suits per day
79) Using the above table, when Jefferson’s Cleaners hires three workers
A) the average product of labor is greater than the marginal product.
B) the marginal product of labor is greater than the average product.
C) it has already experienced diminishing marginal returns.
D) Both answers A and C are correct.
80) Using the data in the above table, which worker hired at Jefferson’s Cleaners is the first to
show diminishing marginal returns?
A) the second
B) the third
C) the fourth
D) the fifth
81) Based on the data in the above table, at what level of output does the marginal cost start to
rise at Jefferson’s Cleaners?
A) 45 suits per day
B) 47 suits per day
C) 74 suits per day
D) 85 suits per day
Labor
(workers)
Total product (books
sold per hour)
0
0
1
10
2
24
3
40
4
58
5
73
6
83
7
87
8
89
9
90
10
90
82) The above table shows the short-run total product schedule for the campus book store. What
is the marginal product (MP) of going from 5 to 6 employees at the book store?
A) 83 books sold
B) 13.83 books sold
C) 10 books sold
D) between 11 and 14 books sold
83) The above table shows the short-run total product schedule for the campus book store. Which
employee has the highest marginal product (MP)?
A) the 10th employee
B) the 5th employee
C) the 4th employee
D) the 1st employee
84) The above table shows the short-run total product schedule for the campus book store. What
is the average product (AP) of the 4th employee?
A) 58 books sold
B) 14.5 books sold
C) 18 books sold
D) 13.3 books sold
85) The above table shows the short-run total product schedule for the campus book store. When
the fifth employee is hired, the marginal product is ________ and is ________ the average
product.
A) increasing; greater than
B) increasing; less than
C) decreasing; greater than
D) decreasing; less than
86) The above table shows the short-run total product schedule for the campus book store. At
what levels of books sold per hour will the marginal product of labor be greater than the average
product of labor?
A) 40 books sold per hour
B) 73 books sold per hour
C) Both A and B are correct.
D) Neither A nor B is correct.
87) The above table shows the short-run total product schedule for the campus book store. When
the book store hires the 3rd employee
A) the bookstore is still experiencing increasing marginal returns.
B) the book store has already begun to experience diminishing marginal returns, but average
product is still rising.
C) both marginal and average product have already begun to decline.
D) marginal product is at its maximum.
88) The above table shows the short-run total product schedule for the campus book store. With
which employee do diminishing marginal returns set in?
A) the 9th employee
B) the 6th employee
C) the 5th employee
D) the 2nd employee
Labor
(workers per day)
Quantity
(T shirts per day)
0
0
1
10
2
22
3
30
4
34
5
35
89) The table above shows some data that describe Tom’s T-Shirts’ total product when Tom has 1
sewing machine. An increase in the number of workers from 1 to 2 a day increases average
product of labor from ________ T shirts per worker and marginal product of labor is ________ T
shirts per worker.
A) 10 to 11; 22
B) 10 to 22; 12
C) 10 to 22; 22
D) 10 to 11; 12
90) The table above shows some data that describe Tom’s T-Shirts’ total product when Tom’s has
1 sewing machine. Diminishing marginal returns begin when the ________ is employed.
A) second worker
B) fifth worker
C) fourth worker
D) third worker
Labor
(workers)
Total product
(units per
hour)
0
0
1
8
2
20
3
34
4
46
5
56
6
64
7
8
74
9
75
91) In the above table, the marginal product of the 7th worker is 6. What is the total product
when 7 workers are employed?
A) 68
B) 70
C) 72
D) 76
92) In the above table, what is marginal product of labor for the 2nd worker?
A) 20
B) 8
C) 10
D) 12
93) In the above table, what is marginal product of labor for the 5th worker?
A) 10
B) 14
C) 9
D) 11.2
94) In the above table, what is average product when 4 workers are employed?
A) 12
B) 10
C) 11.5
D) 9.5
95) In the above table, diminishing marginal returns start to occur when the
A) 3rd worker is employed.
B) 4th worker is employed.
C) 5th worker is employed.
D) 6th worker is employed.
96) If a firm’s marginal product of labor is less than its average product of labor, then an increase
in the quantity of labor it employs definitely will
A) decrease its total product.
B) decrease its average product of labor.
C) increase its marginal product of labor.
D) not change its average product of labor.
97) Which of the following statements is TRUE?
A) When marginal product is less than average product, average product is increasing.
B) When marginal product is less than average product, average product is decreasing.
C) When marginal product is falling, average product is decreasing.
D) When marginal product is rising, average product is decreasing.
98) Which of the following statements is TRUE?
A) If average product equals marginal product, average product decreases.
B) If marginal product equals average product, average product is a maximum.
C) If marginal product equals average product, marginal product is a maximum.
D) If marginal product exceeds average product, marginal product increases.
99) When the marginal product of labor is greater than the average product of labor, the
A) marginal product of labor must be increasing as labor increases.
B) average product of labor must be increasing as labor increases.
C) total product must be increasing at an increasing rate as labor increases.
D) None of the above answers is correct.
100) When the average product of labor is greater than the marginal product of labor
A) the marginal product of labor must be increasing as labor increases.
B) there must be increasing marginal returns.
C) the average product of labor is decreasing as labor increases.
D) None of the above answers is correct
101) When the marginal and average products of labor are equal to each other, the
A) average product must be at its maximum value.
B) marginal product must be at its maximum value.
C) total product must be at its maximum value.
D) None of the above answers is correct
102) When the marginal product of labor is a maximum, the average product of labor is
________.
A) a maximum
B) increasing
C) decreasing
D) equal to marginal product
103) When the marginal product equals the average product, the
A) average product curve is downward sloping.
B) average product curve is upward sloping.
C) marginal product is at its maximum.
D) average product is at its maximum.
104) Which of the following statements is TRUE for any marginal and average?
A) When the marginal is greater than the average, the average increases.
B) When the marginal is less than the average, the average increases.
C) When the marginal is rising, the average is increasing.
D) When the marginal is equal to the average, the average decreases.
105) When the marginal product curve is above the average product curve, ________ as output
increases.
A) average product must decrease
B) average product must increase
C) marginal product must decrease
D) marginal product must increase
106) Which of the following statements is TRUE?
A) The marginal and average product curves intersect at the maximum level of output.
B) At every output level the marginal product curve lies above the average product curve.
C) The marginal product and average product curves intersect when average product is at its
maximum.
D) The marginal product curve always has a positive slope.
107) The marginal product and average product curves
A) never intersect.
B) intersect at the maximum point of the marginal product curve.
C) intersect at the maximum point of the average product curve.
D) do not intersect at any predictable point.
108) When the marginal product curve is downward sloping, the average product curve
A) must also be downward sloping.
B) might be either upward or downward sloping.
C) must be upward sloping.
D) must be horizontal.
109) If a firm’s marginal product of labor is greater than its average product of labor, then an
increase in the quantity of labor it employs definitely
A) increases its total product.
B) increases its marginal product of labor.
C) decreases its average product of labor.
D) does not change its average product of labor.
110) With a technological change that increases productivity, the average product curve
________ and the marginal product curve ________.
A) shifts upward; is unchanged
B) is unchanged; is unchanged
C) is unchanged; shifts upward
D) shifts upward; shifts upward
111) Total product divided by the total quantity of labor employed equals the
A) average product of labor.
B) marginal product of labor.
C) average total cost.
D) average variable cost.
112) Diminishing marginal returns occurs when
A) all inputs are increased and output decreases.
B) all inputs are increased and output increases by a smaller proportion.
C) a variable input is increased and output decreases.
D) a variable unit is increased and its marginal product falls.
113) The average product of labor exceeds the marginal product of labor
A) when the average product of labor is falling.
B) when the average product of labor is rising.
C) when the marginal product of labor is at its maximum.
D) when the average product of labor is at its maximum.