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Quiz III

Total questions: 50

Worksheet time: 50mins

Name
Class
Date
1.

What would be the main aim of the Production/Operation management function be

a)

Creating value

b)

satisfy customer needs

c)

acquiring goods and services required by other business functions

2.

Which of the following form part of the Internal supply chain of the business?

a)

Purchasing function

b)

Marketing function

c)

Micro environment

d)

Public relations function

3.

Which of the following is NOT a factor of production?

a)

Technology

b)

Information technology

c)

land

d)

Interest

4.

A production function assumes a given:

a)

technology.

b)

set of input prices.

c)

ratio of input prices.

d)

amount of capital and labor.

e)

amount of output.

5.

A farmer uses L units of labor and K units of capital to produce Q units of corn using a production function F(K,L). A production plan that uses K'=L'=10 to produce Q' units of corn where Q'<F(10,10) is said to be:

a)

technically feasible and efficient.

b)

technically unfeasible and efficient.

c)

technically feasible and inefficient.

d)

technically unfeasible and inefficient.

e)

none of the above

6.

Which of the following inputs are variable in the long run?

a)

Labour

b)

Capital and equipment

c)

Plant size

d)

all of above

7.

Joe owns a small coffee shop, and his production function is q = 3KL where q is total output in cups per hour, K is the number of coffee machines (capital), and L is the number of employees hired per hour (labor). If Joe's capital is currently fixed at K=3 machines, what is his short-run production function?

a)

q = 3L

b)

q = 3L2

c)

q = 9L

d)

q = 3K2

e)

both c and d

8.

For many firms, capital is the production input that is typically fixed in the short run. Which of the following firms would face the longest time required to adjust its capital inputs?

a)

Firm that makes DVD players

b)

Computer chip fabricator

c)

Nuclear power plant

d)

all of above

9.

We manufacturer automobiles given the production function q = 5KL where q is the number of autos assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L is the number of workers hired per hour (labor). If we use K = 10 robots and L = 10 workers in order to produce q = 450 autos per shift, then we know that production is:

a)

technologically efficient.

b)

optimal

c)

technologically inefficient.

d)

maximized.

e)

non of the above

10.

Which of the following equations based on capital (K) and labor (L) inputs does not represent a plausible production function?

a)

F(K,L) = 3KL

b)

F(K,L) = 3K

c)

F(K,L) = K + L - 1

d)

F(K,L) = 10(KL)0.5

e)

both b and c

11.

Writing total output as Q, change in output as △Q, total labor employment as L, and change in labor employment as △L, the marginal product of labor can be written algebraically as

a)

ΔQ ∙ L.

b)

Q / L.

c)

ΔQ / ΔL.

d)

ΔL / ΔQ.

e)

both b and d

12.

The marginal product of an input is:

a)

total product divided by the amount of the input used to produce this amount of output.

b)

the addition to total output that adds nothing to total revenue.

c)

the addition to total output that adds nothing to profit.

d)

the addition to total output due to the addition of one unit of all other inputs.

e)

the addition to total output due to the addition of the last unit of an input, holding all other inputs constant.

13.

According to the law of diminishing returns:

a)

the total product of an input will eventually be negative.

b)

the marginal product of an input will eventually be negative.

c)

the marginal product of an input will eventually decline.

d)

the total product of an input will eventually decline.

e)

none of the above

14.

At which point on the total product curve is the average product of labor the highest?

a)

Point A

b)

Point B

c)

Point C

d)

Point D

15.

An isoquant:

a)

must be linear

b)

cannot have a negative slope.

c)

is a curve that shows all the combinations of inputs that yield the same total output.

d)

is a curve that shows the maximum total output as a function of the level of labor input.

e)

is a curve that shows all possible output levels that can be produced at the same cost.

16.

Two isoquants, which represent different output levels but are derived from the same production function, cannot cross because:

a)

isoquants are downward sloping.

b)

additional inputs will not be used by profit maximizing firms if those inputs decrease output.

c)

isoquants represent different utility levels.

d)

this would violate a technical efficiency condition.

e)

both b and d

17.

A construction company builds roads with machinery (capital, K) and labor (L). If we plot the isoquants for the production function so that labor is on the horizontal axis, then a point on the isoquant with a small MRTS (in absolute value) is associated with high ________ use and low ________ use.

a)

labor, capital

b)

capital, labor

c)

concrete, gravel

d)

none of the above

18.

Which of the following is a medium-term task?

a)

Determining the production budget

b)

quality control

c)

choosing factory premises

d)

product design

19.

The disadvantage of mass production is …

a)

Equipment and labour are cheap

b)

Quality control is difficult

c)

The cost per unit is high

d)

High stock levels have to be maintained because production happens fast and on a large scale

20.

Production function shows the technological relationship between ......

a)

Owner and Manager

b)

Owner and Labor

c)

Manager and Labor

d)

Inputs and Output

21.

Long run production function means .........

a)

Some factors are variable

b)

Some factors are constant

c)

Some factors are variable and some are constant

d)

All the factors are variable

22.

Law of variable proportion is also called ......

a)

The law of increasing returns

b)

The law of diminishing returns

c)

The law of constant returns

d)

Long run production function

23.

In the short run production function, as the quantity of variable factor is increased the output also increases but after a certain point output .........

a)

Starts being constant

b)

Declines

c)

Also increases

d)

Doesn't effect

24.

Optimal utilization of resources is maintained at the point where .......

a)

MPL = MPK

b)

w = r

c)

MPL/w = MPK/r

d)

MPL - MPK = 0

25.

An Iso-quant shows the same level of ........ throughout the curve.

a)

satisfaction

b)

production

c)

expenditure

d)

profit

26.

In the law of returns to scale, the increasing gap between successive Iso-quants mean............

a)

Increasing return

b)

Decreasing return

c)

Constant return

d)

Negative return

27.

Slope of Iso-cost is determined by .......

a)

Quantity of factors

b)

Volume of expenditure

c)

Level of output

d)

Prices of factors

28.

When the amount of a factor increases the total output

a)

Decreases

b)

is maximum

c)

Increases

d)

becomes zero

29.

_____________ is a function of inputs.

a)

Raw Materials

b)

Output

c)

Production Function

d)

Labour

30.

As the slope of the total product curve gets flatter, and the curve becomes

a)

Convex

b)

Inverted U shape

c)

Straight Line

d)

Concave

31.

________ an addition to the total production by the employment of an extra unit of a factor.

a)

Average Product

b)

Total Product

c)

Marginal Product

d)

Output

32.

Output is the _________ variable

a)

Independent

b)

Dependent

33.

Convexity means that as labor is added, output is increasing at an ________ rate.

a)

Constant

b)

Increasing

c)

Decreasing at a decreasing rate

d)

Decreasing

34.

When more units of a factor are employed for producing a commodity , the average product first ______ then _______.

a)

falls,rises

b)

rises,falls

35.

Which of the following represent 'per labour unit of output'?

a)

TPP

b)

Average Physical Product

c)

Physical Product

d)

Marginal Product

36.
As output of a firm increases, the difference between the firm’s average total cost and its average variable cost gets smaller because the firm’s
a)
total cost is increasing
b)
marginal cost is increasing
c)
average fixed cost is decreasing
d)
marginal product of labor is decreasing 
37.
Change in Total Revenue/Change in Quantity
ΔTR/ΔQ = _____
a)
Marginal cost
b)
Marginal Revenue
c)
Profit
d)
Marginal Profit
38.
The property whereby long-run average total cost falls as the quantity of output increases.
a)
Economies of Scale
b)
Efficient Scale
c)
Constant Returns to Scale
d)
Diseconomies of Scale
39.
The marginal cost curve typically does which of the following?
a)
Increases at a fixed rate.
b)
Decreases and eventually increases.
c)
Decreases at a decreasing rate.
d)
Increases and eventually decreases.
40.
What is the only curve that continues to fall as output increases?
a)
Average Fixed Cost
b)
Average Variable Cost
c)
Average Total Cost
d)
Marginal Cost
41.
Which of the following is a condition of perfect competition?
a)
products produced by rival firms are perfect substitutes
b)
individual firms can affect market supply
c)
industry sales are small
d)
restricted entry and exit
42.

The relationship between the factors of production and the output of goods and services.

a)

Theory of Production

b)

Law of Variable Proportions

c)

Production Function

d)

Stages of Production

e)

Marginal Product

43.

An extra output due to the addition of one more unit of input

a)

Theory of Production

b)

Law of Variable Proportions

c)

Production Function

d)

Stages of Production

e)

Marginal Product

44.

Production Period long enough to change the amount of variables and fixed inputs used in production.

a)

Diminishing Returns

b)

Long Run

c)

Short Run

d)

Stages of Production

e)

Raw Materials

45.
Costs that do not change when the quanity of output produced changes?
a)
Fixed Costs
b)
Variable Costs
c)
Explicit Costs
d)
Implicit Costs
46.
Input costs that may not have a direct outlay of money.  Value of the opportunity cost.
a)
Fixed Cost
b)
Variable Cost
c)
Implicit Cost
d)
Explicit Cost
47.

The long run cost curve comes from:

a)

a map of isoquants.

b)

a map of isocosts.

c)

an expansion path.

d)

an optimal combination of inputs for a given level of output.

48.

a production function:

a)

Gives the minimum level of output that can be produced from a combination of inputs

b)

Gives the different levels of output that can be produced from a combination of inputs

c)

Gives the maximum level of output that can be produced from a combination of inputs

d)

All of the above

49.

A time period when at least one factor of production is held constant is called

a)

Market period

b)

Very short period

c)

Short run

d)

Long run

50.

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

a)

Permanent labour which remains employed at all levels of output

b)

Land on which the factory is located

c)

Machinery which does not change easily

d)

None of the above

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