Question

1- As a firm expands by adding more of the variable input to fixed inputs, it experiences:

a) constant returns, diminishing returns, increasing returns

b) diminishing returns, constant returns, increasing returns

c) increasing returns, constant returns, diminishing returns

d) diminishing returns, increasing returns, constant returns

2- The Production Function is:

a) a curve concave to the origin

b) an upside down parabola

c) A straight line sloping upward

d) An "S" curve

3- The production function shows :

a) the relationship between total product, (output or quantity) and the variable input

b) the trade off between cranberries and blueberries

c) the quantity supplied at various prices

d) the quantity demanded at various prices

4- At Cosi, 2 people make 10 salads in an hour and 3 people make 24 salads in an hour Marginal Product is(select all that apply)

a) greater than average product and therefore average product must be increasing

b) 8

c) 5

d) Best plotted above the Input of 2.5

5- At Cosi, 2 people make 10 salads in an hour and 3 people make 24 salads in an hour What is the average product of the 3 person team?

6- At Cosi, 2 people make 10 salads in an hour and 3 people make 24 salads in an hourWhat is the average product of the 2 person team?

7- At Cosi, 2 people make 10 salads in an hour and 3 people make 24 salads in an hour What is the marginal product of the 3rd person?

8- At Cosi, 3 people make 24 salads in an hour and 2 people make 10 salads in an hour If you were to tell the 3rd person to go home, how much production would you lose?

9- At Cosi, 5 people make 50 salads in an hour and 6 people make 60 salads in an hour What is the average product of the 5 person team?

10-At Cosi, 5 people make 50 salads in an hour and 6 people make 60 salads in an hour What is the average product of the 6 person team?

11- At Cosi, 5 people make 50 salads in an hour and 6 people make 60 salads in an hour What is the marginal product of the 6th person?

12- You would expect that in on hour, 7 people... select all that apply

a)would start to run out of mixing bowls and get in each others way

b)make more than 70 salads

c)is the beginning of diminishing returns

d)would make 69 salads or fewer

Answer 1

(1) As a firm expands by adding more of the variable input to fixed inputs, it experiences increasing return after that constant return and in last deceasing return.

Answer: Option (C)

(2) The production function is an upside down parabola in shape.

Answer: Option (B)

(3) The production function shows the relationship between total product, (output or quantity) and the variable input.

Answer: Option (A)

(4) 2 people make 10 salads

3 people make 24 salads.

MPL = (change in output / change in labor)

MPL = (24 - 10) / (3-2)

MPL = 14

APL = Output / Labor

APL when Labor = 2, then APL = 5

APL when Labor = 3, then APL = 8

MPL is greater than APL, therefore APL must be increasing.

And MPL for 3rd person is best ploted above input 2.5 units

Answer: Option (A) and Option (D)

(5) APL = output / labor

APL = 24 / 3

APL = 8

APL of the third person is 8.

(6) APL = output / labor

APL = 10 / 2

APL = 5

APL of the second person is 5

(7) MPL of third person = Output produced by 3 persons - Output produced by 2 persons.

MPL of third person = 24 -10

MPL of third person = 14

MPL of 3rd person is 14

(8) MPL of 3rd person is 14. It means 3rd person add 14 units in the total output. If 3rd go home, then production will decrease by 14 units.

(9) APL = 50 / 5

APL = 10

APL of the 5th person is 10

(10) APL = 60 / 6

APL = 10

APL of the 6th person is 10

(11) MPL of 6th person = Output produced by 6th person - Output produced by 5th person.

MPL of 6th person = 60 - 50

MPL of 6th person = 10

(12) 6th person resulted into a constant return.

So, the 7th person will leads to the diminishing return (See part 1).

And 7th perdon would make 69 salads or fewer.

Answer: Option (C) and Option (D)