QUIZ OF CHAPTER 5 THEORY OF PRODUCTION

Long run refers to time period in which________________.

• all inputs cannot be increased.

• all inputs can be increased.

• there is at least one variable input.

• there is at least one fixed input.

When the marginal product is negative, the total product is ______________.

• decreasing

• positive

• negative

• maximum

Which of the following combinations is TRUE about factors of production?

• Labour - profit

• Land - output

• Capital - interest

• Entrepreneur - dividend

Which of the following factors of production is likely to be variable in the short run?

• The size of the firm’s plant.

• The location of the firm.

• The number of workers.

• The amount of machinery used.

The following table shows output quantities at the several of labour. At the level of 3^rd labours, average production is _________units.

• 10.4

• 23.5

• 25.3

• 28.3

Production function shows the relationship between input and output.

• TRUE

• FALSE

The change in the total product resulting from a change in a variable input is marginal product.

• TRUE

• FALSE

If marginal product is equal to average product, then marginal product is increasing.

• TRUE

• FALSE

In the third of the three stages of production marginal product is positive.

• TRUE

• FALSE

The law of decreasing returns begins when the marginal production curve____________.

• reaches a maximum point

• rises

• falls

• intersects the X axis