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WorksheetsEconomics products and cost
Total questions: 20
Worksheet time: 10mins
What is the definition of the ‘Marginal Product of Labor’?
The increase in output when an additional worker is employed, holding all other inputs constant
The total output produced by all workers
The increase in total cost when one more unit of labor is employed
The cost per unit of labor employed
In the short run, what typically happens to marginal cost as output increases?
Marginal cost remains constant
Marginal cost decreases
Marginal cost first decreases, then increases
Marginal cost continuously increases
Which of the following explains the Law of Diminishing Returns?
As more units of a variable input are added to fixed inputs, the additional output from each extra unit of the variable input eventually decreases
As more inputs are used, total output will eventually fall
Marginal costs decrease as output increases
Fixed costs diminish as variable inputs are increased
What does the Total Product (TP) curve show?
The relationship between the quantity of input and marginal product
The relationship between the quantity of input and total output
The total cost of production
The efficiency of each unit of input
Which stage of production is considered efficient?
Stage I
Stage II
Stage III
Stage IV
If the marginal product is greater than the average product, what happens to the average product?
It increases
It decreases
It remains constant
It falls to zero
What causes the marginal cost curve to be U-shaped in the short run?
The law of diminishing returns
The law of supply
Economies and diseconomies of scale
Constant returns to scale
At which point do the marginal cost (MC) and average total cost (ATC) curves intersect?
At the maximum point of MC
At the maximum point of ATC
At the minimum point of ATC
At the minimum point of MC
What is the long-run average cost (LRAC) curve also known as?
Envelope curve
U-shaped curve
Marginal product curve
Break-even curve
What is the effect of increasing returns to scale?
Average costs rise
Marginal costs rise
Average costs fall
Total costs remain constant
Which of the following describes constant returns to scale?
Doubling all inputs results in less than double the output
Doubling all inputs results in more than double the output
Doubling all inputs results in double the output
Doubling all inputs results in zero output
If average total cost is rising, what must be true of marginal cost?
Marginal cost is less than average total cost
Marginal cost is equal to average total cost
Marginal cost is greater than average total cost
Marginal cost is at its minimum point
Which of the following best describes economies of scale?
As production increases, average costs rise
As production increases, average costs fall
As production decreases, total costs fall
As production decreases, marginal costs rise
What does the marginal product curve show?
The relationship between marginal cost and total cost
The relationship between output and cost
The change in total output resulting from a one-unit change in the variable input
The total output from all inputs
What does ‘economic cost’ include?
Only explicit costs
Only implicit costs
Both explicit and implicit costs
Neither explicit nor implicit costs
In which time period are all factors of production variable?
Short run
Long run
Immediate run
Past run
When does diminishing marginal returns occur?
When each additional worker adds less output than the previous one
When the total product curve begins to decrease
When marginal cost becomes constant
When fixed inputs are increased
What is the relationship between the marginal product (MP) and marginal cost (MC)?
Inversely related
Directly related
Marginal product equals marginal cost
No relation
What happens to average fixed costs as output increases?
They remain constant
They increase
They decrease
They increase first and then decrease
What is the primary difference between the short run and the long run in production?
In the short run, no inputs can be changed
In the long run, all inputs can be varied
In the short run, all inputs are fixed
In the long run, technology remains constant
