Question 1

For a simple graph of a production function with Q on the y-axis and L on the x-axis,which of the following statements is true?
A) The slope of the production function at a specific point equals the marginal product of labor whereas the average slope of the production function equals the average product of labor.
B) The average product of labor is equal to the slope of the ray from the origin to the apex of the production function for all values of L.
C) The slope of the production function at a specific point equals the marginal product of labor whereas the slope between the origin and a specific point on the production function equals the average product of labor.
D) The average product of labor is never equal to the slope of the ray from the origin to the apex of the production function.

Accepted Answer

The slope of the production function at a specific point equals the marginal product of labor, which is the additional output produced when one more unit of labor is added, holding all other inputs constant. The slope between the origin and a specific point on the production function represents the average product of labor, which is the ratio of total output to the number of units of labor employed. Therefore, statement C is true. Statements A, B, and D are false.

Question 2

Which one of these is false when compared to the relationship between marginal and average product? A) When average product is increasing in labor, marginal product is greater than average product. That is, if AP_L increases in L, then MP_L > AP_L. B) When average product is decreasing in labor, marginal product is less than average product. That is, if AP_L decreases in L, then MP_L < AP_L. C) The relationship between MP_L and AP_L is not the same as the relationship between the marginal of anything and the average of anything. D) When average product neither increases nor decreases in labor because we are at a point at which AP_L is at a maximum, then marginal product is equal to average product.

Accepted Answer

The statement that the relationship between marginal and average product is not the same as the relationship between the marginal of anything and the average of anything is false. The relationship between MPS and APS is a specific example of the general relationship between marginal and average measures. Therefore, choice C is false. Choices A, B, and D are true statements about the relationship between marginal and average product.

Question 3

Factors of production are
A) inputs and outputs.
B) outputs only
C) inputs only
D) the minimum set of inputs that can produce a certain fixed quantity of output.

Accepted Answer

Factors of production refer to the inputs that are used to produce goods and services. These inputs include resources such as labor, capital, land, and entrepreneurship. Therefore, the correct answer is C - inputs only.

Question 4

The labor requirements function is derived from
A) the demand curve.
B) the supply curve.
C) the production function.
D) the capital requirement function.

Accepted Answer

The labor requirements function is derived from the production function, as it reveals the amount of labor needed to produce a certain level of output. The demand curve shows how much consumers are willing to buy at varying prices, the supply curve shows how much firms are willing to sell at varying prices, and the capital requirement function relates the amount of capital needed to produce a certain level of output.

Question 5

Identify the truthfulness of the following statements. I.Because the production function identifies the maximum amount of output that can be produced from a given combination of inputs,only technically efficient input combinations are found on the production function.
II.The production function identifies the technically feasible combinations of inputs.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Accepted Answer

Statement I is true because technically efficient input combinations are those that produce the maximum amount of output from a given combination of inputs, which is exactly what the production function identifies. However, Statement II is false because the production function only identifies the technically possible combinations of inputs, not necessarily the feasible ones. Feasibility also depends on factors such as resource availability and cost, which are not taken into account by the production function.

Question 6

**Reference: Use the following table to answer questions 11 - 14. 
-*The marginal productivity of the third worker is
A) 30.
B) 40.
C) 50.
D) 90.

Accepted Answer

The answer of **Reference: Use the following table to answer...

Question 7

A labor requirements function represents
A) the set of feasible levels of labor that will produce a given level of output.
B) the various recipes for producing a given level of output.
C) the minimum amount of labor necessary to produce a given level of output.
D) the set of all feasible combinations of labor and outputs.

Accepted Answer

A labor requirements function represents the minimum amount of labor necessary to produce a given level of output. It specifies the relationship between the level of output and the corresponding labor input required to produce that output level.

Question 8

**Reference: Use the following table to answer questions 11 - 14. 
-*Marginal productivity is maximized with the ___________ worker.
A) second
B) third
C) fourth
D) sixth

Accepted Answer

The answer of **Reference: Use the following table to answer...

Question 9

When labor is the only input to the production function,why must it be true that when the marginal product of labor is greater than the average product of labor,the average product of labor is increasing and vice versa?
A) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average.
B) When the marginal product of labor is below the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average.
C) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a smaller marginal product than average, thus reducing the average.
D) When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a zero marginal product.

Accepted Answer

When the marginal product of labor is greater than the average product of labor, it means that an additional unit of labor is producing more output than the average unit of labor. This will increase the average product of labor because the new unit of labor is contributing to a higher level of output than the average level of output. Vice versa, if the marginal product of labor is less than the average product of labor, adding another unit of labor will produce less output than the average unit of labor, thus reducing the average product of labor.

Question 10

**Reference: Use the following graph to answer questions 19 - 22. 
-*Average product reaches a maximum when labor equals
A) 100
B) 200
C) 300
D) 400

Accepted Answer

The graph shows that the average product of labor reaches its maximum value when the amount of labor input is 300 units. Beyond this level, the average product starts to decline, indicating the existence of diminishing returns to labor. Therefore, 300 units of labor input would be the optimal choice for maximizing the average product of labor.

Question 11

The production set represents
A) the set of all technically feasible combinations of inputs and outputs.
B) the technically efficient combinations of inputs and outputs.
C) the maximum output the firm can produce from a given level of inputs.
D) the minimum amounts of inputs necessary to produce a given level of output.

Accepted Answer

The production set represents the set of all technically feasible combinations of inputs and outputs, meaning all possible combinations that can be produced with the given inputs and technology. It includes both efficient and inefficient combinations.

Question 12

Technically inefficient points are
A) points in the production set but not on the production function.
B) points on the production function.
C) points contained in neither the production set nor the production function.
D) points that are never observed in practice.

Accepted Answer

Technically inefficient points are those points in the production set but not on the production function. These points represent combinations of inputs that do not produce the maximum possible output level, and are therefore less efficient than points on the production function.

Question 13

**Reference: Use the following graph to answer questions 19 - 22. 
-*Marginal product reaches a maximum when labor equals
A) 100
B) 200
C) 300
D) 400

Accepted Answer

Marginal product reaches its maximum at the point where the slope of the total product curve is zero, which occurs at 200 units of labor. Beyond 200 units of labor, the marginal product decreases, indicating diminishing marginal returns to labor. Thus, the best choice(s) would be 200 units of labor.

Question 14

Suppose a production function has only one input,labor.What can you tell about the slope of the production function,assuming output is on the y-axis and labor is on the x-axis,if production exhibits constant marginal returns to labor?
A) The slope of the production function is positive and increasing exponentially.
B) The slope of the production function is a positive constant.
C) The slope of the production function is negative.
D) The slope cannot be determined.

Accepted Answer

If the production function exhibits constant marginal returns to labor, it means that each additional unit of labor added results in the same increase in output. Therefore, the slope of the production function must be constant and positive, indicating a linear relationship between labor and output.

Question 15

If marginal product is greater than average product
A) total product must be increasing.
B) marginal product must be decreasing.
C) marginal product must be increasing.
D) average product may be increasing or decreasing.

Accepted Answer

The answer of If marginal product is greater than average...

Question 16

Identify the truthfulness of the following statements. I.When the marginal product of labor is falling,the average product of labor is falling.
II.When the marginal product curve lies above the average product curve,then average product is rising.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Accepted Answer

The answer of Identify the truthfulness of the following statements....

Question 17

**Reference: Use the following table to answer questions 11 - 14. 
-*Average productivity is maximized with the ____________ worker.
A) second
B) third
C) fourth
D) sixth

Accepted Answer

According to the table, the average productivity is the highest for the fourth worker, who produces 60 units. Therefore, the best choice is C.

Question 18

**Reference: Use the following table to answer questions 11 - 14. 
-*The average productivity of the fifth worker is
A) 20.
B) 28.
C) 30.
D) 140.

Accepted Answer

The answer of **Reference: Use the following table to answer...

Question 19

Given the simple production function Q = 3K + 4L,where L is the quantity of labor employed and K is the quantity of capital employed,assuming K = 2 and L = 3,what would it mean if output was less than 18?
A) The firm is out of business.
B) The firm is not employing labor and capital efficiently.
C) The production function was not specified correctly.
D) Labor is less productive than capital.

Accepted Answer

If output is less than 18, it means that the firm is not producing as much as it could with the given inputs of labor and capital. This suggests that the firm is not employing labor and capital efficiently. It does not necessarily mean that the firm is out of business, the production function was not specified correctly, or that labor is less productive than capital.

Question 20

The production function represents
A) the quantity of inputs necessary to produce a given level of output.
B) the various recipes for producing a given level of output.
C) the minimum amounts of labor and capital needed to produce a given level of output.
D) the set of all feasible combinations of inputs and outputs.

Accepted Answer

The answer of The production function represents
A) the quantity of...

Quiz 6: Inputs and Production Functions

For a simple graph of a production function with Q on the y-axis and L on the x-axis,which of the following statements is true?

Which one of these is false when compared to the relationship between marginal and average product?

Factors of production are

The labor requirements function is derived from

**Reference: Use the following table to answer questions 11 - 14. -*The marginal productivity of the third worker is

A labor requirements function represents

**Reference: Use the following table to answer questions 11 - 14. -*Marginal productivity is maximized with the ___________ worker.

When labor is the only input to the production function,why must it be true that when the marginal product of labor is greater than the average product of labor,the average product of labor is increasing and vice versa?

**Reference: Use the following graph to answer questions 19 - 22. -*Average product reaches a maximum when labor equals

The production set represents

Technically inefficient points are

**Reference: Use the following graph to answer questions 19 - 22. -*Marginal product reaches a maximum when labor equals

Suppose a production function has only one input,labor.What can you tell about the slope of the production function,assuming output is on the y-axis and labor is on the x-axis,if production exhibits constant marginal returns to labor?

If marginal product is greater than average product

Identify the truthfulness of the following statements. I.When the marginal product of labor is falling,the average product of labor is falling. II.When the marginal product curve lies above the average product curve,then average product is rising.

**Reference: Use the following table to answer questions 11 - 14. -*Average productivity is maximized with the ____________ worker.

**Reference: Use the following table to answer questions 11 - 14. -*The average productivity of the fifth worker is

Given the simple production function Q = 3K + 4L,where L is the quantity of labor employed and K is the quantity of capital employed,assuming K = 2 and L = 3,what would it mean if output was less than 18?

The production function represents