Question 1

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.The average product of labour is highest when the firm hires
A)1 unit of labour.
B)2 units of labour.
C)3 units of labour.
D)4 units of labour.
E)5 units of labour.

Accepted Answer

The answer of The following data show the total output...

Question 2

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
  TABLE 7-4
-Refer to Table 7-4.The marginal product of labour is at its maximum when the firm changes the amount of labour hired from
A)0 to 1 unit.
B)1 to 2 units.
C)2 to 3 units.
D)3 to 4 units.
E)4 to 5 units.

Accepted Answer

The marginal product of labor is at its maximum when the increase in output from hiring an additional unit of labor is the greatest. This typically occurs at the point where the marginal product starts to decrease after initially increasing.

Question 3

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.Diminishing marginal product of labour is first observed when the firm changes the amount of labour hired from
A)0 to 1 units.
B)1 to 2 units.
C)2 to 3 units.
D)3 to 4 units.
E)4 to 5 units.

Accepted Answer

The answer of The following data show the total output...

Question 4

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
  TABLE 7-4
-Refer to Table 7-4.Marginal product of labour begins decreasing with the ________ unit of labour hired.Average product of labour begins decreasing with the ________ unit of labour hired.
A)4th; 3rd
B)3rd; 2nd
C)2nd; 3rd
D)3rd; 4th
E)4th; 5th

Accepted Answer

The answer of The following data show the total output...

Question 5

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
  TABLE 7-4
-Refer to Table 7-4.Diminishing marginal productivity of labour is first observed when the firm changes the amount of labour hired from
A)0 to 1 unit.
B)1 to 2 units.
C)2 to 3 units.
D)3 to 4 units.
E)4 to 5 units.

Accepted Answer

The answer of The following data show the total output...

Question 6

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.The marginal product of labour is at its maximum when the firm changes the amount of labour hired from
A)0 to 1 unit.
B)1 to 2 units.
C)2 to 3 units.
D)3 to 4 units.
E)4 to 5 units.

Accepted Answer

The marginal product of labour is the change in total output resulting from one additional unit of labour. From the table above, we can see that the marginal product of labour reaches a maximum at 600 units of output when the third unit of labour is hired. After the third unit of labour, the marginal product of labour decreases, indicating diminishing returns to labour. Therefore, the best choice(s) would be when the firm changes the amount of labour hired from 2 to 3 units.

Question 7

In the short run,the firm's product curves show
A)AP is at its minimum when MP = AP.
B)TP is at its maximum when MP is at its maximum.
C)TP begins to decrease when AP begins to decrease.
D)when MP < AP,AP is increasing.
E)when the MP curve cuts the AP curve from above,the AP curve begins to fall.

Accepted Answer

When the marginal product (MP) curve cuts the average product (AP) curve from above, it indicates that MP is decreasing and has fallen below AP, causing the AP to start decreasing.

Question 8

Suppose NHL hockey player Jarome Iginla is averaging three points per game going into the last game of the season in which he collects four points,thereby changing his average for the season.To use an analogy in economics,it could be said that average product increases
A)when total product increases.
B)when marginal product exceeds average product.
C)when average product exceeds marginal product.
D)when marginal product increases.
E)whenever marginal product is positive.

Accepted Answer

When marginal product exceeds average product, the average product increases, similar to how Iginla's average points per game increased when he scored more points than his average.

Question 9

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.The average product of labour when the firm hires 3 units of labour is ________.The average product of labour when the firm hires 4 units of labour is ________.
A)30; 33
B)90; 132
C)60; 42
D)90; 222
E)30; 90

Accepted Answer

To calculate the average product of labor, divide the total output by the units of labor.

For 3 units of labor, total output is 90 + 99 + 105 = 294. 
Average product of labor = 294/3 = 98.

For 4 units of labor, total output is 90 + 99 + 105 + 110 = 404. 
Average product of labor = 404/4 = 101.

Therefore, the average product of labor when the firm hires 3 units of labor is 98 and when it hires 4 units of labor is 101. The closest option is (A): 30 for the first entry is not correct, but the numbers 90 and 132 for the second entry are the closest to the calculated values of 98 and 101, respectively.

Question 10

Consider a basket-producing firm with fixed capital.If the firm can produce 36 baskets per day with 3 workers and then increases productivity to 44 baskets per day with 4 workers,then which of the following statements is true?
A)The marginal product of the fourth worker is 11.
B)The firm has passed the point of diminishing average productivity.
C)The marginal product is above the average product.
D)The firm has not yet reached the point of diminishing marginal productivity.
E)With 4 workers,the firm's average product of labour is 13.

Accepted Answer

The answer of Consider a basket-producing firm with fixed capital.If...

Question 11

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
  TABLE 7-4
-Refer to Table 7-4.The marginal product of labour curve intersects the average product of labour curve from above when the firm changes the amount of labour per unit of time from
A)0 to 1 units.
B)1 to 2 units.
C)2 to 3 units.
D)3 to 4 units.
E)4 to 5 units.

Accepted Answer

The answer of The following data show the total output...

Question 12

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.What is the total output per period when this firm is employing labour such that the marginal product of labour is at its maximum?
A)30
B)60
C)90
D)132
E)150

Accepted Answer

To find the point of maximum output per period, we need to look for the point where the marginal product of labor is zero. From the table, we can see that the marginal product increases as we add more labor up to the 3rd unit of labor, after which it starts to decrease. Therefore, the maximum output per period can be obtained when we employ 3 units of labor. At this point, the total output is 132 units (11x12). Therefore, the answer is D.

Question 13

FIGURE 7-1
-Refer to Figure 7-1.If the firm hires the 15th unit of labour,
A)the extra output will be zero.
B)average product will rise.
C)marginal product will be unchanged.
D)the firm will reach its capacity.
E)output will increase by 2 units of output.

Accepted Answer

The marginal product of the 15th unit of labor is zero, so the extra output will be zero.

Question 14

FIGURE 7-1
-Refer to Figure 7-1.Suppose each unit of labour represents one worker for one month.What is the maximum number of workers the firm could hire so that the final worker hired still raises the average product of the other workers?
A)7
B)8
C)9
D)11
E)15

Accepted Answer

The maximum number of workers that the firm could hire so that the final worker hired still raises the average product of the other workers will be the point where the marginal product of labour (MPL) curve intersects the average product of labour (APL) curve for the second time from below. This occurs when the firm hires 9 workers. At this point, MPL is equal to APL and any additional worker hired will decrease APL. Therefore, the best choice is (C) 9.

Question 15

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100.
  TABLE 7-4
-Refer to Table 7-4.The average product of labour is highest when the firm hires ________ units of labour.
A)1
B)2
C)3
D)4
E)5

Accepted Answer

The answer of The following data show the total output...

Question 16

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
  TABLE 7-3
-Refer to Table 7-3.What is the marginal product of the 4th unit of labour hired by the firm?
A)42
B)60
C)132
D)900
E)1320

Accepted Answer

The answer of The following data show the total output...

Question 17

In the short run,the firm's product curves show
A)AP is at its minimum when MP = AP.
B)TP is at its maximum when MP = O.
C)TP begins to decrease when AP begins to decrease.
D)when MP > AP,AP is decreasing.
E)when the MP curve cuts the AP curve from below,the AP curve begins to fall.

Accepted Answer

In the short run, when the marginal product (MP) of the variable input decreases and becomes zero, the total product (TP) is at its maximum. This is because the variable input is being used most efficiently in producing output until a certain point, after which adding more of the variable input starts to lead to diminishing returns. Therefore, the TP curve starts to slope downwards after this point. Option A is incorrect because AP reaches its minimum when MP = 0, not MP = AP. Option C is incorrect because TP can still increase even when AP begins to decrease, as long as MP is positive. Option D is incorrect because MP > AP implies that AP is increasing, not decreasing. Option E is incorrect because AP will only start to fall when the MP curve cuts the AP curve from above, not below.

Question 18

Consider a basket-producing firm with fixed capital.If the firm can produce 36 baskets per day with 3 workers and then increases production to 44 baskets per day with 4 workers,then which of the following statements is true?
A)The marginal product of the fourth worker is 11.
B)With 4 workers,the marginal product is above the average product.
C)The firm has not yet reached the point of diminishing marginal productivity.
D)The firm has passed the point of diminishing marginal productivity.
E)With 4 workers,the firm's average product of labour is 8.

Accepted Answer

Diminishing marginal productivity occurs when each additional worker adds less to the total output than the worker before them. The increase in production going from 3 to 4 workers (from 36 to 44 baskets) is only a marginal increase of 8 baskets, meaning that the fourth worker's marginal product is less than the third worker's. This indicates that the firm has passed the point of diminishing marginal productivity.

Question 19

Consider a basket-producing firm with fixed capital.If the firm can produce 24 baskets per day with 3 workers and then increases production to 36 baskets per day with 4 workers,then which of the following statements is definitely true?
A)The firm has passed the point of diminishing marginal productivity.
B)The marginal productivity of the fourth worker is 9.
C)The firm has passed the point of diminishing average productivity.
D)With 4 workers,the average product is greater than the marginal product.
E)With 4 workers,the marginal product is greater than the average product.

Accepted Answer

The answer of Consider a basket-producing firm with fixed capital.If...

Question 20

Suppose that when a firm hires one additional unit of labour,total product increases from 100 to 110 units of output per month.Marginal product must therefore be
A)increasing.
B)positive.
C)decreasing.
D)constant.
E)zero.

Accepted Answer

From the given information, we can calculate the marginal product of labor as the increase in total product from hiring one additional unit of labor.

Marginal product = (Change in total product) / (Change in labor input)

Here, the change in total product is 10 units (110 - 100), and the change in labor input is 1 unit.

Therefore, marginal product = 10/1 = 10 units.

Since the marginal product is positive (i.e., greater than zero), it means that hiring one more unit of labor is increasing the total product.

Quiz 7: Producers in the Short Run

In the short run,the firm's product curves show

Suppose NHL hockey player Jarome Iginla is averaging three points per game going into the last game of the season in which he collects four points,thereby changing his average for the season.To use an analogy in economics,it could be said that average product increases

Consider a basket-producing firm with fixed capital.If the firm can produce 36 baskets per day with 3 workers and then increases productivity to 44 baskets per day with 4 workers,then which of the following statements is true?

FIGURE 7-1 -Refer to Figure 7-1.If the firm hires the 15th unit of labour,

FIGURE 7-1 -Refer to Figure 7-1.Suppose each unit of labour represents one worker for one month.What is the maximum number of workers the firm could hire so that the final worker hired still raises the average product of the other workers?

In the short run,the firm's product curves show

Consider a basket-producing firm with fixed capital.If the firm can produce 36 baskets per day with 3 workers and then increases production to 44 baskets per day with 4 workers,then which of the following statements is true?

Consider a basket-producing firm with fixed capital.If the firm can produce 24 baskets per day with 3 workers and then increases production to 36 baskets per day with 4 workers,then which of the following statements is definitely true?

Suppose that when a firm hires one additional unit of labour,total product increases from 100 to 110 units of output per month.Marginal product must therefore be