1. Which of these assumptions is often realistic for a firm in the short run?
a.
The firm can vary both the size of its factory and the number of workers it employs.
b.
The firm can vary the size of its factory but not the number of workers it employs.
c.
The firm can vary the number of workers it employs but not the size of its factory.
d.
The firm can vary neither the size of its factory nor the number of workers it employs.
2. Assume a certain firm regards the number of workers it employs as variable but regards the size of its factory as fixed.
This assumption is often realistic
a.
in the short run but not in the long run.
b.
in the long run but not in the short run.
c.
both in the short run and in the long run.
d.
neither in the short run nor in the long run.
3. Suppose that a “doggie day care” firm uses only two inputs: hourly workers (labor) and a building (capital). In the short
run, the firm most likely considers
a.
b.
c.
d.
4. Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and
a computer (capital). In the short run, Christine most likely considers
a.
b.
c.
d.
5. A production function describes
a.
how a firm maximizes profits.
b.
how a firm turns inputs into output.
c.
the minimal cost of producing a given level of output.
d.
the relationship between cost and output.
6. A production function is a relationship between inputs and
a.
quantity of output.
b.
revenue.
c.
costs.
d.
profit.
7. If a firm uses labor to produce output, the firm’s production function depicts the relationship between
a.
the number of workers and the quantity of output.
b.
marginal product and marginal cost.
c.
the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor.
d.
fixed inputs and variable inputs in the short run.
8. For a firm, the production function represents the relationship between
a.
implicit costs and explicit costs.
b.
quantity of inputs and total cost.
c.
quantity of inputs and quantity of output.
d.
quantity of output and total cost.
9. For a firm, the relationship between the quantity of inputs and quantity of output is called the
a.
profit function.
b.
production function.
c.
total-cost function.
d.
quantity function.
10. Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin
Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total
output of his shrimp business?
a.
7,000 pounds
b.
3,500 pounds
c.
3,000 pounds
d.
1,000 pounds
11. Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her.
Together Kate and William can arrange 35 bouquets per day. What is William’s marginal product?
a.
55 bouquets
b.
35 bouquets
c.
22.5 bouquets
d.
15 bouquets
12. Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her.
William can arrange 18 bouquets per day. What would be the total daily output of Kate’s firm if she hired her husband?
a.
18 bouquets
b.
19 bouquets
c.
20 bouquets
d.
38 bouquets
13. The marginal product of labor is equal to the
a.
incremental cost associated with a one unit increase in labor.
b.
incremental profit associated with a one unit increase in labor.
c.
increase in labor necessary to generate a one unit increase in output.
d.
increase in output obtained from a one unit increase in labor.
14. The marginal product of labor can be defined as the change in
a.
profit divided by the change in labor.
b.
output divided by the change in labor.
c.
labor divided by the change in output.
d.
labor divided by the change in total cost.
15. The marginal product of an input in the production process is the increase in
a.
total revenue obtained from an additional unit of that input.
b.
profit obtained from an additional unit of that input.
c.
total revenue obtained from an additional unit of that input.
d.
quantity of output obtained from an additional unit of that input.
16. When a firm’s only variable input is labor, then the slope of the production function measures the
a.
quantity of labor.
b.
quantity of output.
c.
total cost.
d.
marginal product of labor.
17. Let L represent the number of workers hired by a firm, and let Q represent that firm’s quantity of output. Assume two
points on the firm’s production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the
13th worker is
a.
8 units of output.
b.
10 units of output.
c.
122 units of output.
d.
132 units of output.
18. Let L represent the number of workers hired by a firm, and let Q represent that firm’s quantity of output. Assume two
points on the firm’s production function are (L = 5, Q = 125) and (L = 6, Q = 152). Then the marginal product of the 6th
worker is
a.
25 units of output.
b.
27 units of output.
c.
37 units of output.
d.
162 units of output.
19. Let L represent the number of workers hired by a firm, and let Q represent that firm’s quantity of output. Assume two
points on the firm’s production function are (L=6,Q=147) and (L=7,Q=184). The marginal product of the seventh worker
is
a.
25 units of output.
b.
27 units of output.
c.
37 units of output.
d.
184 units of output.
20. Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to
produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the
16th worker is
a.
10 units of output.
b.
11 units of output.
c.
16 units of output.
d.
181 units of output.
21. Suppose a firm currently produces 325 units of output per day with 15 workers. The firm is able to produce 340 units
of output with a 16th worker. What is the marginal product of the 16th worker?
a.
10 units of output
b.
15 units of output
c.
16 units of output
d.
25 units of output
22. The marginal product of any input is the
a.
increase in total cost associated with a one-unit increase in production.
b.
change in total output associated with a $1.00 increase in total cost.
c.
increase in total cost resulting from the hiring of an additional worker.
d.
increase in total output obtained from one additional unit of that input.
23. Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together,
Eldin and Murphy can paint five houses per week. What is Murphy’s marginal product?
a.
2 houses
b.
3 houses
c.
5 houses
d.
8 houses
24. Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering
hiring her friend Atul to help her. Together, Riva and Atul can bottle and sell seven cases per week. What is Atul’s
marginal product?
a.
2 cases
b.
3 cases
c.
5 cases
d.
7 cases
25. Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can
paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?
a.
2 houses
b.
3 houses
c.
5 houses
d.
8 houses
26. Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering
hiring her friend Atul to help her. Atul can bottle and sell three cases per week. What is the maximum total output
possible if Riva hires Atul?
a.
3 cases
b.
4 cases
c.
7 cases
d.
11 cases
Table 13-1
Number of Workers
Total Output
Marginal Product
0
0
—
1
30
2
45
3
60
4
50
5
40
27. Refer to Table 13-1. What is total output when 1 worker is hired?
a.
10
b.
30
c.
45
d.
75
28. Refer to Table 13-1. What is total output when 2 workers are hired?
a.
15
b.
45
c.
75
d.
120
29. Refer to Table 13-1. What is total output when 3 workers are hired?
a.
15
b.
60
c.
105
d.
135
30. Refer to Table 13-1. What is total output when 4 workers are hired?
a.
–10
b.
50
c.
135
d.
185
31. Refer to Table 13-1. What is total output when 5 workers are hired?
a.
–10
b.
90
c.
185
d.
225
Table 13-2
Number of
Workers
Total
Output
Marginal
Product
0
0
—
1
300
2
500
3
600
4
650
32. Refer to Table 13-2. What is the marginal product of the first worker?
a.
300 units
b.
200 units
c.
100 units
d.
50 units
33. Refer to Table 13-2. What is the marginal product of the second worker?
a.
300 units
b.
200 units
c.
100 units
d.
50 units
34. Refer to Table 13-2. What is the marginal product of the third worker?
a.
300 units
b.
200 units
c.
100 units
d.
50 units
35. Refer to Table 13-2. What is the marginal product of the fourth worker?
a.
300 units
b.
200 units
c.
100 units
d.
50 units
36. Refer to Table 13-2. At which number of workers does diminishing marginal product begin?
a.
1
b.
2
c.
3
d.
4
Table 13-3
Number of
Workers
Output
Fixed
Cost
Variable
Cost
Total
Cost
0
0
$50
$0
$50
1
90
$50
$20
$70
2
170
$50
$40
$90
3
230
$50
$60
$110
4
240
$50
$80
$130
37. Refer to Table 13–3. The marginal product of the second worker is
a.
90 units.
b.
85 units.
c.
80 units.
d.
20 units.
38. Refer to Table 13–3. The marginal product of the third worker is
a.
230 units.
b.
100 units.
c.
77 units.
d.
60 units.
39. Refer to Table 13-3. The marginal product of the fourth worker is
a.
10 units.
b.
60 units.
c.
230 units.
d.
240 units.
40. Refer to Table 13-3. At which number of workers does diminishing marginal product begin?
a.
1
b.
2
c.
3
d.
4
41. When adding another unit of labor leads to an increase in output that is smaller than the increases in output that
resulted from adding previous units of labor, the firm is experiencing
a.
diminishing labor.
b.
diminishing output.
c.
diminishing marginal product.
d.
negative marginal product.
42. On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce
4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of
diminishing marginal product?
a.
The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
b.
The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
c.
The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
d.
Any of the above could be correct.
43. On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce
4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of
diminishing marginal product?
a.
The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
b.
The farmer is able to produce 5,400 bushels of wheat when he hires 4 workers.
c.
The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers.
d.
Any of the above could be correct.
44. When the marginal product of an input declines as the quantity of that input increases, the production function exhibits
a.
increasing marginal product.
b.
diminishing marginal product.
c.
diminishing total product.
d.
Both b and c are correct.
45. As Bubba’s Bubble Gum Company adds workers while using the same amount of machinery, some workers may be
underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba’s
Bubble Gum Company encounters
a.
economies of scale.
b.
diseconomies of scale.
c.
increasing marginal product.
d.
diminishing marginal product.
46. If a production function shows declining marginal product of an input as the quantity of the input increases, then the
production function exhibits
a.
diminishing profitability.
b.
increasing returns to scale.
c.
increasing marginal product.
d.
diminishing marginal product.
Figure 13-2