Theory of Production

The relationship between the factors of production and the output of goods and services.

• Marginal Product

• Law of Variable Proportions

• Production Function

• Stages of Production

An increase in total production due to an increase of one unit of variable input is known as ______________________.

• Marginal cost

• Average cost

• Marginal product

• Average product

When the total product is maximum, the marginal product is _________________.

• positive.

• zero.

• negative.

• maximum.

Marginal product curve and the average product curve intersect _______________.

• at the maximum point of the marginal product curve.

• where total product is at a maximum.

• where marginal product equals zero.

• at the maximum point of the average product curve.

A production function shows about the relationship between

• Input and cost

• Outputs and cost

• Products and cost

• Input and Output

The average amount of output produced by each labor employed is

• Total Product

• Marginal Product

• Average product

• Production function

The law of diminishing marginal returns states that

• as more of a variable input is used, while other inputs and technology are fixed, the average product of the variable input will increase.

• as more of a variable input is used, while other inputs and technology are fixed, the marginal product of the variable input will eventually decrease.

• as more of a variable input is used, while other inputs and technology are fixed, the average product of the fixed input will eventually decrease.

• as more of a fixed input is used, while other inputs and technology are variable, the marginal product of the variable input will eventually increase.

Select all that apply.

 The formula for Average Product (AP) is:

•  $AP=\frac{TP}{Q_L},\ where\ Q_L\ is\ a\ Quantity\ of\ Labor$  

•  $AP=\frac{TP}{Q_C},\ where\ Q_C\ is\ a\ Quantity\ of\ Capital$  

•  $AP=\frac{TP}{Q_L},\ where\ Q_L\ is\ a\ Quantity\ of\ Land$  

•  $AP=\frac{TP}{Q},\ where\ Q_{ }\ is\ a\ Quantity\ produced$  

Formula for Marginal Product (MP) is:

• $\frac{\Delta TP}{\Delta Q_{input}}$

• $\frac{TP}{Q_{input}}$

• $\frac{Q_{input}}{Total\ product}$

• $\frac{Change\ in\ Quality}{Change\ in\ price}$

Total Product is

• the Quality of Input

• The Quality of Output

• The Quantity of Output

• The Quantity of Input