Economic Concepts Quiz

With capital held constant, when Zane employs one additional worker, the marginal product of labor decreases by units. Which economic concept best characterizes Zane's production process?

• Increasing marginal returns

• Constant returns to scale

• Economies of scale

• Diseconomies of scale

The relationship in the graph above best illustrates the economic concept of

• opportunity cost

• diminishing marginal utility in consumption

• production possibilities

• comparative advantage

Based on the production data, which of the following statements about the marginal product of the fifth worker is true?

• It is the maximum that can be attained.

• It is greater than the marginal product of the first worker due to increasing returns.

• It is greater than the combined marginal products of all the other workers.

• It is rising due to increasing marginal returns.

As the firm hires additional workers, one would expect the marginal product to

• fall initially, but eventually rise

• rise consistently due to diminishing return

• rise consistently due to the advantages of specialization

• rise consistently due to economies of scale

The marginal product per week of the sixth worker is

• $70

• $350

• 7.5 trains

• 42.5 trains

Which of the following will happen if the firm continues to hire additional units of labor beyond in the short run?

• The firm's marginal cost will decrease.

• The firm will begin experiencing diminishing marginal returns.

• The firm's fixed cost will increase.

• The average product of labor will be equal to zero.

What is the marginal product of the third worker?

At which quantity of labor does marginal cost change from decreasing to increasing?

• L1

• L3

• L4

• L5

Given the production schedule above, what is the maximum number of workers the firm can hire before the effects of diminishing marginal returns set in?

• 1

• 3

• 4

• 5

Which of the following provides an example of the law of diminishing returns?

• A farm doubles all its inputs and observes that output less than doubles.

• A textile producer's output increases by 5 units when adding a fourth worker and by 7 units when adding a fifth worker.

• If a fixed input increases, fewer additional units of a variable input will be needed to increase output by one unit.

• More cooks in a single kitchen will increase the number of meals produced by increasing amounts.