Quiz #4 Production, Costs, Revenue

A production function shows about the relationship between

• Input and cost

• Outputs and cost

• Products and cost

• Input and Output

The law of diminishing marginal returns states that

• as more of a factory's workforce is hired, while other factors of production are fixed, the average productivity of each worker will increase.

• as more of a factory's workforce is hired, while other factors of production are fixed, the marginal productivity of each worker will eventually decrease.

• as more of a factory's workforce is hired, while other factors of production are fixed, the average productivity of the fixed input will eventually decrease.

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

When a team's productivity starts to decline, what happens to the average and marginal output?

• The average output falls below the marginal output

• The average and marginal output intersect

• The marginal output falls below the average output

• The average and marginal output are equal

The “law of Returns to scale” applies to:

• The short run, but not the long run.

• The long run, but not the short run.

• Both the short run and the long run.

• Neither the short run nor long run

Direction of TP, AP & MP in 3rd stage of Law of variable proportions shall be

• All the three Increasing

• TP increasing, AP & MP falling

• All the three falling

• TP & AP increasing, MP falling

Shyam recently went into the business of producing and selling cardboard boxes. For this business, which of the following is most likely to be a fixed cost?

• fire insurance

• labor costs

• paper costs

• adhesive costs

Which of the following statements is false?

• Since (total) fixed costs are constant as output changes in the short run, it follows that average fixed cost is constant in the short run.

• Marginal cost is the cost of producing an additional unit of output.

• Changes in variable costs are reflected dollar-for-dollar in changes in total cost.

• Fixed costs exist in the short run, but not in the long run.

A rising marginal cost curve is a reflection of a

• rising marginal physical product curve.

• falling marginal physical product curve.

• falling average fixed cost curve.

• rising average variable cost curve.

Which of the following statements is true?

• If the marginal cost curve is above the AFC curve, the AFC curve must be rising.

• Average total cost equals average variable cost minus average fixed cost.

• As output increases, the average variable cost curve gets closer to the average total cost curve.

• The AFC curve is horizontal as output increases

Which of the following cost curves is never U-shaped?

• the average total cost curve

• the average fixed cost curve

• the marginal cost curve

• the average variable cost curve