TUTORIAL : THEORY OF PRODUCTION

Which of the following is an example of a fixed input?

• The acreage of a farmer's land.

• Machinery.

• The size of a firm's plant.

• All of the above

Variable inputs are defined as any resource that _____________

• varies with the size of the firm's plant.

• cannot be changed as output changes.

• can be changed as output changes.

• can be increased or decreased hourly.

The short run is a period of time ___________

• in which a firm uses at least one fixed input.

• that is long enough to permit changes in the firm's plant size.

• in which production occurs within one year.

• in which production occurs within six months.

During the course of a week, McDonald's has enough time to hire or layoff workers, but it does not have enough time to expand its kitchen or add an additional seating area. In this situation, McDonald's ___________

• has no fixed costs.

• is in the short run.

• suffers an economic loss.

• earns a large profit.

During the short run, a firm has enough time to adjust ___________

• its technology.

• its fixed inputs

• its variable inputs.

• all of its inputs-both fixed and variable.

The long run is a period of time ______________

• that is too short to change the size of a firm's plant.

• that is long enough to permit changes in all the firm's inputs, both fixed and variable.

• in which production occurs beyond one year.

• in which production occurs beyond five years.

A firm can produce 450 gallons of milk per day with 4 workers and 500 gallons per day with 5 workers. The marginal product of the fifth worker expressed in gallons per worker per day, is ______________

• 35

• 50

• 70

• 350

A farm can produce 10,000 bushels of wheat per year with 5 workers and 13,000 bushels with 6 workers. The marginal product of the sixth worker for this farm is ______________

• 10,000 bushels.

• 3,000 bushels.

• 500 bushels

• 23,000 bushels.

Marginal product measures the change in ____________

• total cost brought about by changing production by one unit.

• product price brought about by changing production by one unit.

• a firm’s revenue brought about by changing production by one unit.

• the firm’s output brought about by employing one additional unit of input

When a total output curve is falling, its corresponding marginal product curve is ____________

• vertical.

• horizontal

• rising.

• falling.