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.

Total Product is

• the Quality of Input

• The Quality of Output

• The Quantity of Output

• The Quantity of Input