Chapter 8 Production Review Questions

At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is A) 4 cakes, and the average product for three workers is 6 cakes. B) 18 cakes, and the average product for three workers is 6 cakes. C) 6 cakes, and the average product for three workers is also 6 cakes. D) 9 cakes and is equal to the average product. E) 32 cakes, and the average product for three workers is 9 cakes.

A) 4 cakes, and the average product for three workers is 6 cakes

Which of the following is a factor of production that generally is fixed in the short run? A) a factory building B) water C) labor D) raw materials

A) A factory building

A characteristic of the long run is: A) all inputs can be varied. B) there are fixed inputs. C) plant capacity cannot be increased or decreased. D) there are both fixed and variable inputs.

A) all inputs can be varied

Which of the following is an implicit cost of production? A) rent that could have been earned on a building owned and used by the firm B) interest paid on a loan to a bank C) wages paid to labor plus the cost of carrying benefits for workers D) the utility bill paid to water, electricity, and natural gas companies

A) rent that could have been earned on a building owned and used by the firm

Refer to Table 8-1. What is the average product of labor when the farm hires 5 workers? A) 4 pounds B) 10.8 bushels C) 38.2 pounds D) 54 pounds

B) 10.8 bushels

The law of diminishing marginal returns states A) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases. B) that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. C) that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. D) that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added.

B) that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product to decline

In the short run, marginal product of labor increases at first and then falls because A) managerial inefficiency sets in when a firm gets too large. B) there are fewer opportunities for division of labor and specialization when fewer workers are hired. C) as more labor is hired, they are not as skilled as the first ones hired. D) the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive.

B) there are fewer opportunities for division of labor and specialization when fewer workers are hired.

Refer to Table 8-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes predicted 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

B) third

Refer to Figure 8-1. The marginal product of the 3rd worker is A) 57. B) 19. C) 15. D) 11.

C) 15

Diminishing marginal product of labor occurs when adding another unit of labor A) decreases output by an amount smaller than the output added by the previous unit of labor. B) decreases output. C) changes output by an amount smaller than the output added by the previous unit of labor. D) increases output by an amount larger than the output added by the previous unit of labor.

C) changes output by an amount smaller than the output added by the previous unit of labor

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

C) the average product of labor

Which of the following is an implicit cost of production? pt2 A) the interest you pay your mother for the money she loaned you to start your business B) the salary you pay yourself for running your business C) the loss in the value of capital equipment due to wear and tear D) the utility bill paid to water, electricity, and natural gas companies

C) the loss in the value of capital equipment due to wear and tear

If another workers adds 9 units of output to a group of workers who had an average product of 7 units, then the average product of labor A) will remain the same. B) will decrease. C) will increase. D) and what will happen to it cannot be determined.

C) will increase

Refer to Figure 8-1. The marginal product of the 7th worker is A) 66. B) 9.43. C) 2. D) -2.

D) -2

Refer to Table 8-2. What is the marginal product of the 4th worker? A) 230 bushels B) 57.4 bushels C) 50 bushels D) 12.4 bushels

D) 12.4 bushels

If 11 workers can produce a total of 54 units of product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is A) 60 units. B) 54 units. C) 48 units. D) 5 units.

D) 5 units

Refer to Table 8-1. What is the marginal product of the 4th worker? A) 137 pounds B) 50 pounds C) 12.5 pounds D) 5 pounds

D) 50 pounds

Which of the following is an example of a long-run adjustment? A) Ford Motor Company lays off 2,000 assembly line workers. B) Your university offers Saturday morning classes next fall. C) A soybean farmer turns on the irrigation system after a month long dry spell. D) Walmart builds another Supercenter.

D) Walmart builds another Supercenter

The short run is the time frame A) during which all costs are implicit costs. B) during which the quantities of all resources are variable. C) during which the quantities of all resources are fixed. D) during which the quantities of some resources are fixed. E) that is less than a year.

D) during which the quantities of some resources are fixed

When the slope of the total product curve is steep, the marginal product is A) not defined. B) zero. C) low. D) high. E) negative.

D) high

The marginal product of labor is defined as A) the cost of hiring one more worker. B) the additional sales revenue that results when one more worker is hired. C) the additional number of workers required to produce one more unit of output. D) the additional output that results when one more worker is hired, holding all other resources constant.

D) the additional output that results when one or more worker is hired, holding all other resources constant

Refer to Figure 8-2. The curve labeled "F" is A) the marginal product curve B) the total product curve C) the output supply curve D) the average product curve

D) the average product curve

Refer to Figure 8-2. The curve labeled "E" is A) the output supply curve. B) the total product curve C) the average product D) the marginal product curve.

D) the marginal product curve

The production function shows A) the technology used to produce output. B) the total cost of producing a given quantity of output. C) the incremental output gained by improving the production process. D) the maximum output that can be produced from each possible quantity of inputs.

D) the maximum output that can be produced from each possible quantity of inputs