ECO 146 Chapter 6

Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is​ eighteen, A. marginal product is rising. B. average product is falling. C. average product is rising. D. marginal product is falling.

C

At a given level of labor​ employment, knowing the difference between the average product of labor and the marginal product of labor tells you A. how increasing labor use alters the average product of labor. B. whether increasing labor use raises output. C. whether the law of diminishing returns applies. D. whether increasing labor use changes the marginal product of labor. E. whether economies of scale exist.

A

If the isoquants in an isoquant map are downward sloping but bowed away from the origin​ (i.e., concave to the​ origin), then the production technology violates the assumption of A. diminishing marginal returns. B. technical efficiency. C. positive average product. D. free disposal.

A

Marginal product crosses the horizontal axis​ (is equal to​ zero) at the point where A. total product is maximized. B. diminishing returns set in. C. output per worker reaches a maximum. D. average product is maximized. E. all of the above are true.

A

Refer to the figure at right. At point​ A, the marginal product of labor is A. rising. B. at its maximum. C. at its minimum. D. diminishing.

A

Refer to the figure at right. This figure shows the impact of technological improvements and conveys the idea that A. even though any given production process exhibits diminishing​ returns, labor productivity increases with technological improvements. B. technology causes an increase in the output per time​ period, but as the production functions​ show, the contributions of technology are also subject to diminishing marginal returns. C. without an increase in the productivity of​ labor, the contributions of technology are insufficient to avoid diminishing returns as the production function shifts upward. D. productivity increases with​ technology, but just as labor is subject to diminishing​ returns, so is technology.

A

Refer to the figure at right. At point​ C, A. the marginal product of labor is greater than the average product of labor. B. the average product of labor is greater than the marginal product of labor. C. the marginal product of labor and the average product of labor are equal. D. the marginal product of labor and the average product of labor are both increasing. E. both B and D are correct.

B

Refer to the figure at right. At which point on the total product curve is the average product of labor the​ highest? A. Point A B. Point B C. Point C D. Point D E. None of the above

B

Refer to the figure at right. The situation pictured is one of A. increasing returns to​ scale, because the isoquants are convex. B. increasing returns to​ scale, because doubling inputs results in more than double the amount of output. C. decreasing returns to​ scale, because the isoquants are convex. D. decreasing returns to​ scale, because doubling inputs results in less than double the amount of output. E. constant returns to​ scale, because the line through the origin is linear.

B

The situation pictured in the figure at right A. is one of increasing marginal returns to capital. B. is consistent with diminishing marginal product. C. is one of increasing marginal returns to labor. D. contradicts the law of diminishing marginal product. E. shows decreasing returns to scale.

B

What is the long​ run? A. A period of time longer than five years. B. An amount of time needed to make all production inputs variable. C. An amount of time needed for a firm to build a new production plant. D. A period of time longer than three years.

B

When the average product is​ decreasing, marginal product A. exceeds average product. B. is less than average product. C. is decreasing. D. is increasing. E. equals average product.

B

A construction company builds roads with machinery​ (capital, K) and labor​ (L). If we plot the isoquants for the production function so that labor is on the horizontal​ axis, then a point on the isoquant with a small MRTS​ (in absolute​ value) is associated with high​ __________ use and low​ __________ use. A. ​concrete; gravel B. ​capital; labor C. ​labor; capital D. None of the above.

C

According to the law of diminishing returns A. the total product of an input will eventually decline. B. the marginal product of an input will eventually be negative. C. the marginal product of an input will eventually decline. D. the total product of an input will eventually be negative. E. none of the above.

C

If the law of diminishing marginal returns applies to​ labor, then A. the average product of labor must eventually become negative. B. the marginal product of labor must eventually become negative. C. after some level of​ employment, the marginal product of labor must fall. D. the marginal product of labor must rise and then fall as employment rises. E. the average product of labor must rise and then fall as employment increases.

C

The law of diminishing returns refers to diminishing A. total returns. B. average returns. C. marginal returns. D. all of the above.

C

The marginal product of an input is A. total product divided by the amount of the input used to produce this amount of output. B. the addition to total output due to the addition of one unit of all other inputs. C. the addition to total output due to the addition of the last unit of an​ input, holding all other inputs constant. D. the addition to total output that adds nothing to total revenue. E. the addition to total output that adds nothing to profit.

C

Which of the following would NOT be a factor of production in a​ bakery? A. Flour B. Ovens C. Advertising D. Labor

C

A function that indicates the maximum output per unit of time that a firm can​ produce, for every combination of inputs with a given​ technology, is called: A. a production possibility curve. B. an isocost function. C. an isoquant. D. a production function.

D

An examination of the production isoquants in the figure at right reveals that A. capital and labor must be used in fixed proportions. B. capital and labor are perfectly substitutable. C. the isoquants have a constant MRTS. D. both B and C are correct. E. none of the above.

D

Consider the following statements when answering this​ question: I. If a technology exhibits diminishing returns then it also exhibits decreasing returns to scale. II. If a technology exhibits decreasing returns to scale then it also exhibits diminishing returns. A. Both I and II are true. B. I is​ true, and II is false. C. I is​ false, and II is true. D. Both I and II are false.

D

Does it make sense to consider the returns to scale of a production function in the short​ run? A. ​Yes, this is an important​ short-run characteristic of production functions. B. ​Yes, returns to scale determine the diminishing marginal returns of the inputs. C. ​No, returns to scale is a property of the​ consumer's utility function. D. ​No, we cannot change all of the production inputs in the short run.

D

For many​ firms, capital is the production input that is typically fixed in the short run. Which of the following firms would face the longest time required to adjust its capital​ inputs? A. ​Flat-screen TV manufacturer B. Computer chip fabricator C. Firm that makes DVD players D. Nuclear power plant

D

The law of diminishing returns applies to A. both the short and the long run. B. neither the short nor the long run. C. all​ inputs, with no reference to the time period. D. the short run only. E. the long run only.

D

The slope of the total product curve is the A. slope of a line from the origin to the point. B. average product. C. marginal rate of technical substitution. D. marginal product.

D

Use the following two statements to answer this​ question: I. The marginal product of labor is the slope of the line from the origin to the total product curve at that level of labor usage. II. The average product of labor is the slope of the line that is tangent to the total product curve at that level of labor usage. A. I is​ true, and II is false. B. I is​ false, and II is true. C. Both I and II are true. D. Both I and II are false.

D

What describes the graphical relationship between average product and marginal​ product? A. Average product cuts marginal product from​ below, at the maximum point of marginal product. B. Marginal product cuts average product from​ below, at the maximum point of average product. C. Average product cuts marginal product from​ above, at the maximum point of marginal product. D. Marginal product cuts average product from​ above, at the maximum point of average product. E. Average and marginal product do not intersect.

D

Which of the following inputs is variable in the long​ run? A. Capital and equipment B. Plant size C. Labor D. All of the above

D