Suppose the total output curve increases at an increasing rate for workers 1 to 50, increases at a decreasing rate from workers 51 to 101, and decreases beyond 101 workers. You would know that
Choose one answer.
a. marginal product is increasing from workers 1 to 50 and then becomes negative after worker 51.
b. marginal product is increasing from workers 1 to 50, constant from workers 51 to 101, and is decreasing after that.
c. marginal product is increasing from workers 1 to 50, decreasing after 51 workers, and becomes negative after the 101st worker.
d. marginal product is decreasing from workers 1 to 101, becoming negative at the 102nd worker.
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Marks: 10
Which of the following statements is correct?
Choose one answer.
a. When marginal product is greater than average physical product, average physical product is equal to total product.
b. When marginal product is greater than average physical product, total product is increasing at a decreasing rate.
c. When marginal product is greater than average physical product, average physical product is decreasing.
d. When marginal product is greater than average physical product, average physical product is increasing.
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Marks: 10
When a manager considers total cost, they consider which relation?
Choose one answer.
a. AFC
b. ATC
c. TC = TFC + TVC
d. TC = C + (I - G)
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Marks: 10
If four laborers were hired and 88 widgets were produced, what is the average physical product of labor?
Choose one answer.
a. 14
b. 22
c. 352
d. 44
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Marks: 10
In the short run, the additional output that results from hiring an additional unit of a variable input is the
Choose one answer.
a. average product.
b. average variable cost.
c. marginal physical product.
d. marginal cost.
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Marks: 10
At Phil's Hot Dog Stand the following occurred: four laborers produced 66 hot dogs, five laborers produced 76 hot dogs, six laborers produced 84 hot dogs, seven laborers produced 88 hot dogs. What was the marginal physical product of the 6th laborer?
Choose one answer.
a. Eight hot dogs
b. Five hot dogs
c. Six hot dogs
d. Ten hot dogs
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Marks: 10
The shape of the short-run cost curve is a result of
Choose one answer.
a. the law of diminishing returns.
b. economies of scale.
c. diseconomies of scale.
d. falling profits.
1. - a
4. - a
5. - b
6. - d
7. - b
8. - a
9. - c
To answer these questions, you will need to understand the concepts of marginal product, average physical product, total cost, and short-run cost curves.
1. The total output curve increasing at an increasing rate for workers 1 to 50, increasing at a decreasing rate from workers 51 to 101, and decreasing beyond 101 workers indicates that the marginal product is increasing from workers 1 to 50, decreasing after 51 workers, and becomes negative after the 101st worker. Therefore, the correct answer is c. marginal product is increasing from workers 1 to 50, decreasing after 51 workers, and becomes negative after the 101st worker.
2. When the marginal product is greater than average physical product, total product is increasing at a decreasing rate. Therefore, the correct answer is b. When marginal product is greater than average physical product, total product is increasing at a decreasing rate.
3. When a manager considers total cost, they consider the relation TC = TFC + TVC, where TC is the total cost, TFC is the total fixed cost, and TVC is the total variable cost. Therefore, the correct answer is c. TC = TFC + TVC.
4. To calculate the average physical product of labor, divide the total output (widgets) by the number of laborers. In this case, if four laborers produced 88 widgets, the average physical product of labor is 22. Therefore, the correct answer is b. 22.
5. The additional output that results from hiring an additional unit of a variable input is known as the marginal physical product. Therefore, the correct answer is c. marginal physical product.
6. To calculate the marginal physical product of the 6th laborer, subtract the total output produced by 5 laborers from the total output produced by 6 laborers. In this case, the marginal physical product of the 6th laborer is 88 - 84 = 4 hot dogs. Therefore, the correct answer is not provided in the options.
7. The shape of the short-run cost curve is a result of the law of diminishing returns, which states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. Therefore, the correct answer is a. the law of diminishing returns.