BASIC MICROECON

What does the short-run period in production mean?

• All inputs are fixed

• All inputs are variable

• Some inputs are fixed, and others are variable

• None of the above

Which of the following is an example of a fixed input in the short run?

• Labor

• Raw materials

• Machinery

• Electricity

The Law of Diminishing Returns states that as more units of a variable input are added to a fixed input:

• Total output increases at an increasing rate

• Marginal output increases, then decreases

• Marginal output remains constant

• Total output decreases

In the short run, fixed inputs are:

• Unaffected by changes in production

• Directly proportional to output

• Variable depending on output

• Determined by market price

Marginal Product (MP) is calculated as:

• Change in total output divided by change in input

• Total output minus fixed cost

• Average total cost divided by output

• Change in total cost divided by change in output

Which of the following happens when diminishing returns set in?

• Marginal Product begins to decline

• Total Product decreases

• Marginal Product becomes zero

• Fixed inputs increase

The production function becomes relatively flat when:

• Marginal Product is rising

• Marginal Product is falling

• Marginal Product is constant

• Total Product is decreasing

Fixed costs in the short run are:

• Directly proportional to output

• Incurred even when production is zero

• Always equal to variable costs

• Variable as output changes

Which curve is steeper as output increases in the short run?

• Average Fixed Cost Curve

• Total Cost Curve

• Marginal Product Curve

• None of the above

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

• Factory building

• Workers hired

• Fixed machinery

• Office rent