Short-Run and Long-Run Production
42 questions· page 1 of 5
The statement and the table provide information about a production function.
The production function represents the amount of ......1...... obtainable from each combination of ......2...... and can be used to give information about ......3...... .
Which words correctly complete gaps 1, 2 and 3?
Options
| 1 | 2 | 3 | |
|---|---|---|---|
| A | demand | labour | returns to scale |
| B | demand | labour | normal profit |
| C | output | inputs | returns to scale |
| D | output | inputs | supernormal profit |
The table shows the output of chairs at a factory when different numbers of workers are employed.
| number of workers | 0 | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|---|
| number of chairs produced | 0 | 7 | 17 | 26 | 34 | 40 |
When will diminishing marginal returns to labour set in?
Options
A when the second worker is employed
B when the third worker is employed
C when the fourth worker is employed
D when the fifth worker is employed
The production schedule indicates how total output increases as up to five workers are employed per week.
| employment of workers | total product (units) |
|---|---|
| 0 | 0 |
| 1 | 6.0 |
| 2 | 13.0 |
| 3 | 21.0 |
| 4 | 27.5 |
| 5 | 33.5 |
What is the marginal product when the average product per worker equals 7.0 units?
Options
A 6.0 units
B 6.5 units
C 7.0 units
D 8.0 units
The diagram shows a long-run average cost curve (LRAC), and three short-run average cost curves (SRAC1, SRAC2 and SRAC3) for an individual firm. Each short-run average cost curve represents a fixed factor of production.
Between levels of output OL and OM, which statement is not correct?
Options
A Average fixed costs are falling.
B Economies of scale are being experienced.
C The law of diminishing returns is operative.
D There are decreasing returns to scale.
Which diagram correctly shows the relationship between the average product (AP) and the marginal product (MP) of labour, given that the quantities of other factor inputs remain constant?
Options
A firm initially employs 50 workers, each working 40 hours a week, and produces a total output of 18 000 units. It then employs an additional 10 workers, again each working 40 hours, and total output rises to 19 200 units.
Which effect does this rise in employment have on labour productivity per hour?
Options
A decreases it by 1 unit
B decreases it by 40 units
C increases it by 120 units
D increases it by 1200 units
What is most likely to lead to an increase in labour productivity?
Options
A encouraging women to enter the workforce
B increasing automation
C raising the retirement age
D reducing the division of labour
As the number of workers employed by a firm increases, the marginal product of labour decreases but remains positive.
What happens to the firm’s total output?
Options
A It stops increasing.
B It increases at a constant rate.
C It increases at a falling rate.
D It increases at a rising rate.
What is not a requirement for the law of diminishing returns to operate in the short run?
Options
A At least one factor will be fixed in quantity.
B Average returns to a variable factor will increase then fall.
C Marginal product of a variable factor will increase then fall.
D Inputs of all of the factors will be variable.
The diagram shows a firm’s short-run average cost curve.
What explains the shape of the curve?
Options
A the law of diminishing marginal utility
B the law of variable proportions
C fixed costs exceeding variable costs
D technical diseconomies