Question 1

Figure 13-2 
-Refer to Figure 13-2. As the number of workers increases,
A)marginal product decreases.
B)total output decreases.
C)marginal product increases but at a decreasing rate.
D)Both a and b are correct.

Accepted Answer

As the number of workers increases, marginal product decreases. This is shown by the downward sloping marginal product curve in the graph. Total output initially increases at a decreasing rate and then starts decreasing after reaching the point of diminishing returns.

Question 2

Table 13-1 
-Refer to Table 13-1. What is total output when 4 workers are hired?
A)-10
B)50
C)135
D)185

Accepted Answer

When 4 workers are hired, the total output is 185, which is the highest output of all the choices. Adding any more workers after this point would result in diminishing returns and lower total output. Therefore, hiring 4 workers is the best choice.

Question 3

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.

Accepted Answer

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits diminishing marginal product. This means that each additional unit of the input contributes less to the overall output than the previous unit. This, in turn, leads to a decrease in the slope of the production function, which can result in diminishing total product if the input continues to be added.

Question 4

Table 13-3 
-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.

Accepted Answer

The answer of Table 13-3 
-Refer to Table 13-3. The...

Question 5

Table 13-2 
-Refer to Table 13-2. At which number of workers does diminishing marginal product begin?
A)1
B)2
C)3
D)4

Accepted Answer

Diminishing marginal product begins when the marginal product of the additional worker is less than the marginal product of the previous worker. In this case, we see that at 2 workers, the marginal product goes from 20 to 18, indicating diminishing returns. Therefore, the best choice is to hire 2 workers.

Question 6

Table 13-1 
-Refer to Table 13-1. What is total output when 5 workers are hired?
A)-10
B)90
C)185
D)225

Accepted Answer

When 5 workers are hired, the total output is the sum of the marginal product of each worker at that level of employment: 
MP1 = 30 
MP2 = 40 
MP3 = 45 
MP4 = 38 
MP5 = 32 
Total output = MP1 + MP2 + MP3 + MP4 + MP5 = 30 + 40 + 45 + 38 + 32 = 185. 
Therefore, the best choice is D, with a total output of 185.

Question 7

Figure 13-2 
-Refer to Figure 13-2. As the number of workers increases,
A)total output increases but at a decreasing rate.
B)marginal product increases but at a decreasing rate.
C)marginal product increases at an increasing rate.
D)total output decreases.

Accepted Answer

As the number of workers increases, there is a point after which the marginal product of labor decreases, leading to a decrease in the rate at which total output increases (i.e. decreasing marginal returns). Therefore, choice A is the correct answer.

Question 8

Table 13-2 
-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

Accepted Answer

The marginal product of the third worker is 100 units, as it is the difference between the total product of 600 units when three workers are employed and the total product of 500 units when two workers are employed. Therefore, the best choice would be to hire only three workers, as hiring the fourth or fifth worker would result in diminishing returns and a decrease in total product.

Question 9

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.

Accepted Answer

This is exactly the definition of diminishing marginal product, which occurs when adding additional units of a variable input (like labor) leads to a smaller increase in output than previous units of that input. This is a common occurrence in production as more and more units of a variable input are added to a fixed amount of other inputs (like capital or land), eventually leading to diminishing returns.

Question 10

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.

Accepted Answer

If the production function shows declining marginal product of an input as the quantity of input increases, it is considered to exhibit diminishing marginal product. This means that each additional unit of input added yields less and less additional output, which can ultimately lead to diminishing profitability.

Question 11

Table 13-2 
-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

Accepted Answer

Marginal product of the second worker is the difference between total product when two workers are employed (800) and total product when one worker is employed (600), which equals 200 units. Therefore, the marginal product of the second worker is 200 units.

As for the best choice(s), it depends on the goals and constraints of the firm. If the goal is to maximize output, then the firm should continue hiring workers as long as the marginal product of each additional worker is positive and the cost of hiring each additional worker is less than the revenue earned from their output. In this case, the marginal product of the third worker is 100 units and the marginal product of the fourth worker is 50 units. Both values are positive, so the firm should hire both workers if the cost of hiring them is less than the revenue earned from their output. However, if the goal is to minimize costs or maximize profits, then the firm should hire workers until the marginal cost of each additional worker equals the marginal revenue earned from their output. Without information on the cost of hiring workers or the revenue earned from their output, it is impossible to make a definite recommendation on the best choice.

Question 12

Figure 13-2 
-Refer to Figure 13-2. The graph illustrates a typical
A)total-cost curve.
B)production function.
C)production possibilities frontier.
D)marginal product of labor curve.

Accepted Answer

The answer of Figure 13-2 
-Refer to Figure 13-2. The...

Question 13

Table 13-3 
-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.

Accepted Answer

The answer of Table 13-3 
-Refer to Table 13-3. The...

Question 14

Table 13-2 
-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

Accepted Answer

The answer of Table 13-2 
-Refer to Table 13-2. What...

Question 15

Table 13-3 
-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.

Accepted Answer

The answer of Table 13-3 
-Refer to Table 13-3. The...

Question 16

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.

Accepted Answer

The answer of On a 100-acre farm, a farmer is...

Question 17

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.

Accepted Answer

The table shows that as more workers are added, the increase in output (Units) decreases with each additional worker, indicating diminishing marginal product.

Question 18

Table 13-2 
-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

Accepted Answer

The marginal product of the first worker is the increase in output from hiring the first worker, which is 300 units (from 0 to 300 units).

Question 19

Table 13-3 
-Refer to Table 13-3. At which number of workers does diminishing marginal product begin?
A)1
B)2
C)3
D)4

Accepted Answer

Diminishing marginal product begins at the second worker, as the total product increases by only 10 units from one to two workers, and then only by 6 units from two to three workers.

Question 20

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.

Accepted Answer

The answer of On a 100-acre farm, a farmer is...

Quiz 13: The Costs of Production

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Table 13-1 -Refer to Table 13-1. What is total output when 4 workers are hired?

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Table 13-3 -Refer to Table 13-3. The marginal product of the second worker is

Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Table 13-2 -Refer to Table 13-2. What is the marginal product of the third worker?

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

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Table 13-2 -Refer to Table 13-2. What is the marginal product of the second worker?

Figure 13-2 -Refer to Figure 13-2. The graph illustrates a typical

Table 13-3 -Refer to Table 13-3. The marginal product of the fourth worker is

Table 13-2 -Refer to Table 13-2. What is the marginal product of the fourth worker?

Table 13-3 -Refer to Table 13-3. The marginal product of the third worker is

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?

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

Table 13-2 -Refer to Table 13-2. What is the marginal product of the first worker?

Table 13-3 -Refer to Table 13-3. At which number of workers does diminishing marginal product begin?

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?