The Costs of Production - Production and Cost

A production function describes

• how a firm maximizes profits.

• how a firm turns inputs into output.

• the minimal cost of producing a given level of output.

• the relationship between cost and output.

What is the marginal product of the second worker?

• 15

• 20

• 22.5

• 25

What is the marginal product of the third worker?

• 15

• 20

• 35

• 60

Alyson’s pet sitting service experiences diminishing marginal productivity with the addition of the

• first worker.

• second worker.

• third worker.

Suppose that Alyson’s pet sitting service has a fixed cost of $50 per month for her cell phone. Each worker costs Alyson $60 per day. What is the shape of Alyson’s total cost curve as output increases from 0 and 45?

• Total cost increases but gets flatter.

• Total cost increases and gets steeper.

• Total cost decreases and gets flatter.

• Total cost decreases but gets steeper.

Assume a certain firm regards the number of workers it employs as variable but regards the size of its factory as fixed. This assumption is often realistic

• in the short run but not in the long run.

• in the long run but not in the short run.

• both in the short run and in the long run.

• neither in the short run nor in the long run.

Lois is a self-employed pet sitter. She can make 20 “housecalls” per day. She is considering hiring her sister Dora to work for her. Dora can visit 18 houses per day. What would be the total output of Lois’s firm if she hired her sister?

• 18

• 19

• 20

• 38

The graph illustrates a typical

• total-cost curve.

• production function.

• production possibilities frontier.

• marginal product of labor curve.

As the number of workers increases,

• total output increases but at a decreasing rate.

• marginal product increases but at a decreasing rate.

• marginal product increases at an increasing rate.

• total output decreases.

With regard to cookie production, the figure implies

• diminishing marginal product of workers.

• diminishing marginal cost of cookie production.

• decreasing cost of cookie production.

• increasing marginal product of workers.