Short Run Production Theory Quiz

What does the production function represent?

• Relationship between inputs and outputs

• Relationship between costs and profits

• Relationship between demand and supply

• Relationship between competitors

What is the relationship between Total Product and Marginal Product?

• When TP is minimum, MP is positive

• When TP is maximum, MP is negative

• When TP is decreasing, MP is positive

• When TP is increasing, MP is positive

What does the Law of Diminishing Marginal Returns state?

• As more variable inputs are added, MP initially rises then falls

• As more fixed inputs are added, MP rises

• As more variable inputs are added, MP continuously rises

• As more fixed inputs are added, MP falls

What is the stage of production where MP is positive and increasing?

• Stage 1

• Stage 4

• Stage 2

• Stage 3

What is the formula for Marginal Cost?

• MC = ΔVC/ΔFC

• MC = ΔTC/ΔQ

• MC = ΔQ/ΔTC

• MC = ΔFC/ΔVC

What is the Average Fixed Cost formula?

• AFC = Q/TC

• AFC = TC/Q

• AFC = Q/TFC

• AFC = TFC/Q

What is the concept of Variable Cost?

• Cost that changes when more units are produced

• Cost that is independent of the number of units produced

• Cost that is fixed in the long run

• Cost that is fixed in the short run

What is the relationship between Marginal Product and Total Product at the inflection point?

• MP max corresponds to an inflection point on the TP function

• MP max corresponds to a decrease in TP

• MP max corresponds to an increase in TP

• MP max corresponds to a constant TP