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Worksheets5.2 Supply: Theory of Production
Total questions: 156
Worksheet time: 1hrs 18mins
Name
Class
Date
1.
What does the text indicate about changes in manufacturing, such as a fourfold increase in staff?
a)
They are common occurrences in any type of business.
b)
They only happen in the fast food industry.
c)
They are rare and only happen during economic booms.
d)
They only occur in businesses described in the news story.
e)
They are always preceded by a decrease in staff.
2.
Changes in manufacturing, such as the fourfold increase in staff described in the news story above, happen all the time in any type of _____________.
a)
business
b)
school
c)
government
d)
household
e)
organization
3.
Based on the text, what can be generally said about shifts in manufacturing processes, like a major increase in personnel?
a)
These shifts are routine occurrences across various businesses.
b)
These shifts are unique to the manufacturing sector.
c)
These shifts are usually temporary and quickly reversed.
d)
These shifts are the result of government regulation.
e)
These shifts indicate the company is failing.
4.
According to the text, what is the easiest factor of production for a business to adjust, especially evident in the fast food industry?
a)
The number of workers.
b)
The amount of capital investment.
c)
The level of technology used.
d)
The size of the physical location.
e)
The cost of raw materials.
5.
In fact, if you have ever worked in the fast food industry, you already know that the number of workers is the easiest factor of production for a business to _____________.
a)
change
b)
stabilize
c)
increase
d)
reduce
e)
automate
6.
What conclusion does the text draw regarding managing production factors, using the fast food industry as an example?
a)
Labor is the most readily adjustable input for a business.
b)
Capital is the most difficult factor to change.
c)
Technology determines production flexibility.
d)
Location is the most crucial factor for success.
e)
Raw material costs fluctuate most often.
7.
What common workplace experience is used to illustrate the ease with which labor can be adjusted?
a)
Being called in during busy times or sent home when sales are slow.
b)
Receiving a yearly performance review.
c)
Attending mandatory staff meetings.
d)
Learning a new piece of equipment.
e)
Having to wear a uniform.
8.
How many times, for example, have you or one of your friends been called in when the business got _____________, or were sent home when sales slowed down?
a)
busy
b)
audited
c)
relocated
d)
quiet
e)
renovated
9.
The example of being called in or sent home demonstrates which concept related to employment?
a)
How easily a firm can alter the size of its labor force.
b)
The importance of having flexible hours.
c)
The unreliability of fast food work.
d)
The effect of weather on sales.
e)
The mandatory requirement of overtime.
10.
Why is labor frequently considered the variable factor of production?
a)
Because firms can easily adjust the number of workers when demand changes.
b)
Because workers have a fixed hourly wage.
c)
Because labor is the most expensive factor of production.
d)
Because workers require the most training time.
e)
Because labor is the least-skilled input.
11.
Because it is so easy for firms to change the number of workers it employs whenever demand changes, labor is often thought of as being the _____________ factor of production.
a)
variable
b)
fixed
c)
capital
d)
natural
e)
constant
12.
What term is commonly used to describe labor due to its flexibility in response to shifting consumer demand?
a)
Variable factor of production.
b)
Fixed cost of production.
c)
Substitute good.
d)
Complementary input.
e)
Long-run resource.
13.
What is the primary purpose of a production function, as defined in the text?
a)
To illustrate how total output changes when a single variable input changes while others are constant.
b)
To track the market price of the final product.
c)
To calculate a company's total profit.
d)
To determine the optimal number of customers.
e)
To measure the fixed costs of a business.
14.
Production can be illustrated with a production function—a figure that shows how total output changes when the amount of a single _____________ input (usually labor) changes while all other inputs are held constant.
a)
variable
b)
fixed
c)
primary
d)
secondary
e)
required
15.
In economics, what tool or figure is used to display the relationship between a single adjustable input (like labor) and total production, assuming all other factors remain unchanged?
a)
A production function.
b)
A supply and demand curve.
c)
A balance sheet.
d)
A profit and loss statement.
e)
A consumer price index.
16.
In what two ways can the production function be visually represented?
a)
With a schedule (like Panel A of Figure 5.5) or with a graph (like Panel B).
b)
With an equation or with a diagram.
c)
With a bar chart or with a pie chart.
d)
With a verbal description or an analogy.
e)
With a financial report or a spreadsheet.
17.
The production function can be illustrated with a schedule, such as the one in Panel A of Figure 5.5, or with a _____________ like the one in Panel B.
a)
graph
b)
flow chart
c)
spreadsheet
d)
equation
e)
narrative
18.
What are the common methods mentioned for presenting the data of a production function?
a)
A table of values (schedule) or a visual plot (graph).
b)
A written contract or a verbal agreement.
c)
A time-series analysis or a cross-sectional study.
d)
A cost-benefit analysis or a break-even point.
e)
An organizational chart or a mission statement.
19.
What data do both Panel A and Panel B present regarding production?
a)
Hypothetical output based on changing the number of workers from zero to 12.
b)
The actual profit generated by the firm.
c)
The historical price of the final product.
d)
The fixed costs associated with the business.
e)
The total revenue for the year.
20.
Both panels list hypothetical output as the number of workers changes from zero to _____________.
a)
12
b)
10
c)
5
d)
20
e)
100
21.
The information shown in both visual representations (Panel A and B) consists of what type of figures related to production?
a)
Estimated production levels for worker counts between 0 and 12.
b)
Audited production figures from the last quarter.
c)
Industry averages for worker productivity.
d)
Forecasts for next year's sales.
e)
The minimum number of workers required.
22.
What is the resulting output if, according to Panel A, zero workers are utilized?
a)
No output is produced.
b)
A small, fixed amount of output is produced.
c)
The total output is impossible to determine.
d)
The output is negative.
e)
The output is at its maximum.
23.
According to the numbers in Panel A, if no workers are used, there is no _____________.
a)
output
b)
cost
c)
profit
d)
demand
e)
efficiency
24.
What does the production schedule (Panel A) imply about the relationship between labor input and production starting at zero workers?
a)
Zero workers result in zero production.
b)
Zero workers result in maximum production.
c)
Output increases linearly with the first worker.
d)
The firm incurs a loss with zero workers.
e)
Production requires capital, not labor.
25.
Based on the figures, what is the total output when the firm employs exactly one worker?
a)
7 units of output.
b)
1 unit of output.
c)
0 units of output.
d)
13 units of output.
e)
20 units of output.
26.
If the number of workers goes up by one, output rises to _____________.
a)
7
b)
1
c)
six seven
d)
20
e)
38
27.
What is the production level achieved when the first worker is added, according to the text's data?
a)
Total output reaches 7.
b)
Marginal product is 1.
c)
Total output remains at zero.
d)
Total output drops slightly.
e)
The output doubles.
28.
What is the total output if a second worker is added to the firm?
a)
Total output rises to 20.
b)
Total output rises to 14.
c)
Total output falls to 7.
d)
Marginal product is 20.
e)
Output remains at 7.
29.
Add another worker and total output rises to _____________.
a)
20
b)
7
c)
13
d)
27
e)
38
30.
What is the cumulative production level once two workers are employed, as per the text's example?
a)
The firm produces 20 units in total.
b)
The firm produces 13 additional units.
c)
The firm produces 2 units total.
d)
The production rate slows down.
e)
The output is maximized.
31.
What two variables are plotted on the axes of the production function graph in Panel B?
a)
Variable inputs (horizontal axis) and total production (vertical axis).
b)
Price (horizontal axis) and quantity demanded (vertical axis).
c)
Marginal cost (horizontal axis) and marginal revenue (vertical axis).
d)
Time (horizontal axis) and profit (vertical axis).
e)
Fixed inputs (horizontal axis) and total cost (vertical axis).
32.
We can use this information to construct the production function that appears as the graph in Panel B, where the number of variable inputs is shown on the horizontal axis, and total production on the _____________ axis.
a)
vertical
b)
horizontal
c)
diagonal
d)
x-
e)
z-
33.
When graphing the production function, what does the vertical axis represent?
a)
The cumulative quantity of goods or services produced (total production).
b)
The number of workers or variable inputs used.
c)
The overall time taken for production.
d)
The unit cost of the variable input.
e)
The stage of returns.
34.
When economists study production, which period do they primarily focus on, and why?
a)
The short run, because only the variable input can be changed.
b)
The long run, because all inputs can be changed.
c)
The medium run, because some fixed costs become variable.
d)
The financial year, for tax purposes.
e)
The historical period, to look at trends.
35.
When economists analyze production, they focus on the short run, a period so brief that only the amount of the _____________ input can be changed.
a)
variable
b)
fixed
c)
capital
d)
land
e)
primary
36.
What is the key characteristic of the "short run" as defined by economists when analyzing production?
a)
It is a time frame where only the quantity of the variable factor can be altered.
b)
It is a time frame where all factors of production are fixed.
c)
It is a period of less than six months.
d)
It is the period before a business starts making profit.
e)
It is a period where costs are minimized.
37.
Why is the production function shown in Figure 5.5 considered a reflection of the short run?
a)
Because the only input that changes is the total number of workers.
b)
Because it only shows output for a single day.
c)
Because it assumes technology is constantly improving.
d)
Because the firm is experiencing losses.
e)
Because all resources are fully adjustable.
38.
The production function in Figure 5.5 reflects the short run because only the total number of _____________ changes.
a)
workers
b)
machines
c)
hours
d)
factories
e)
land
39.
The production scenario presented in Figure 5.5 is limited to the short run because the adjustment is confined to what specific input?
a)
The size of the labor force.
b)
The number of factories used.
c)
The type of technology employed.
d)
The total amount of land available.
e)
The quantity of raw materials.
40.
What three inputs are explicitly mentioned as remaining unchanged in the short-run scenario of the production function?
a)
Machinery, technology, or land.
b)
Workers, raw materials, or capital.
c)
Demand, price, or revenue.
d)
Management, training, or logistics.
e)
Sales, marketing, or advertising.
41.
No changes occur in the amount of machinery, technology or _____________ used.
a)
land
b)
labor
c)
money
d)
output
e)
profit
42.
Which categories of productive resources are held constant, distinguishing the short-run period described?
a)
Capital equipment, know-how, and physical space.
b)
The number of employees, the cost of labor, and raw materials.
c)
The selling price, the market size, and the firm's competitors.
d)
The number of total products, the marginal product, and total revenue.
e)
The type of good produced, the brand name, and the CEO.
43.
In the short-run context described, what must be the cause of any observed change in output?
a)
A change in the number of workers.
b)
A change in the amount of machinery.
c)
A change in technology.
d)
A change in the price of the final product.
e)
A change in land use.
44.
Thus, any change in output must be caused by a change in the number of _____________.
a)
workers
b)
machines
c)
demand
d)
hours
e)
customers
45.
Given the fixed nature of certain inputs in the short run, what is the sole determinant of variations in total production?
a)
The modification of the labor input.
b)
Fluctuations in the cost of capital.
c)
The introduction of new land.
d)
Advancements in technology.
e)
Shifts in consumer preferences.
46.
What distinguishes the long run from the short run in terms of resource adjustment?
a)
It is a period long enough to adjust all productive resources, including capital.
b)
It is a period where no resources can be adjusted.
c)
It is a period focused only on adjusting labor.
d)
It is a period that lasts exactly one year.
e)
It is a period where demand is fixed.
47.
Other changes take place in the long run, a period long enough for the firm to adjust the quantities of all productive resources, including _____________.
a)
capital
b)
labor
c)
raw materials
d)
prices
e)
marketing
48.
How do economists define the "long run" regarding a firm's productive capacity?
a)
A timeframe ample enough for the company to modify the amounts of all production inputs.
b)
A timeframe in which only labor can be changed.
c)
A timeframe focused on maximizing short-term profit.
d)
A timeframe less than a fiscal year.
e)
A timeframe where all costs are fixed.
49.
What is an example of a long-run change following a reduction in the labor force?
a)
The firm may have to close down some factories later on.
b)
The firm must immediately hire more workers.
c)
The price of the product will instantaneously double.
d)
The firm will use less technology.
e)
The firm will acquire more land.
50.
For example, a firm that reduces its labor force today may also have to close down some _____________ later on.
a)
factories
b)
stores
c)
offices
d)
suppliers
e)
schools
51.
The scenario of a firm reducing its staff now and eventually having to shut down production facilities illustrates what type of economic change?
a)
A change occurring over the long run.
b)
A purely short-run adjustment.
c)
A microeconomic phenomenon.
d)
A change in consumer demand.
e)
A shift in variable costs only.
52.
Why are changes like closing down factories considered long-run changes?
a)
Because the amount of capital used for production changes.
b)
Because they affect the number of workers.
c)
Because they happen in a short period of time.
d)
Because they are caused by technology.
e)
Because they only involve land.
53.
These are long-run changes because the amount of _____________ used for production changes.
a)
capital
b)
labor
c)
demand
d)
profit
e)
variable input
54.
The text identifies adjustments to capital, such as facility closure, as long-run changes for what reason?
a)
They involve altering the quantity of capital resources employed in the production process.
b)
They are the simplest changes a firm can make.
c)
They are the only way to reduce labor.
d)
They happen before the short run.
e)
They only affect the total product.
55.
What economic concept is represented in the second column of Figure 5.5?
a)
Total product, which is the total output produced by the firm.
b)
Marginal product, which is the extra output from one unit of variable input.
c)
Total revenue, which is the income from sales.
d)
Total cost, which is the sum of fixed and variable costs.
e)
Variable input, which is the number of workers.
56.
The second column in Figure 5.5 shows total product, or the total _____________ produced by the firm.
a)
output
b)
cost
c)
profit
d)
revenue
e)
input
57.
How does the text define the information contained in the second column of the production data in Figure 5.5?
a)
The overall quantity of goods or services made by the business.
b)
The additional output from the last worker hired.
c)
The price at which the firm sells its goods.
d)
The total investment made in machinery.
e)
The amount of time spent producing.
58.
What pattern is observed in the second column as the number of workers increases?
a)
Output starts at zero with zero workers and increases to 7 with one worker, and continues to rise.
b)
Output decreases consistently as workers are added.
c)
Output remains constant regardless of the number of workers.
d)
Output reaches its maximum with the first worker.
e)
Output becomes negative with the second worker.
59.
As you read down the column, you will see that zero units of total output are produced with zero workers, seven are produced with one worker, and _____________ on.
a)
so
b)
later
c)
always
d)
never
e)
only
60.
What specific data points are provided to exemplify the relationship in the total product column?
a)
Zero output for zero workers, and 7 units of output for one worker.
b)
13 units of output for one worker.
c)
Maximum output at all times.
d)
Equal output for every worker.
e)
Decreasing output as workers are added.
61.
Why is the total product data considered a short-run relationship?
a)
Because only the amount of labor changes while other resources remain fixed.
b)
Because total output always varies.
c)
Because it takes place over a long period.
d)
Because all resources are variable.
e)
Because the firm is not making a profit.
62.
Again, this is a short-run relationship, because the figure assumes that only the amount of labor varies while the amount of other resources used remains _____________.
a)
unchanged
b)
increased
c)
decreased
d)
variable
e)
unknown
63.
The relationship between labor and total product is categorized as a short-run concept because it depends on the premise that only which factor is being adjusted?
a)
The labor input, with all other inputs being held constant.
b)
The total quantity of capital equipment.
c)
The amount of available land.
d)
The firm's adopted technology.
e)
The marginal cost of production.
64.
What does having the total product data allow the text to easily introduce next?
a)
The next measure of output (marginal product).
b)
The total revenue of the firm.
c)
The fixed cost of production.
d)
The market demand curve.
e)
The long-run average cost.
65.
Now that we have total product, we can easily see how we get our next _____________.
a)
measure
b)
worker
c)
machine
d)
factory
e)
price
66.
Knowing the overall output figure (total product) is presented as a necessary step for determining which subsequent calculation?
a)
The measure of output derived from adding one more variable input.
b)
The firm's overall profit margin.
c)
The total monetary value of all assets.
d)
The cost of hiring the next worker.
e)
The change in consumer preferences.
67.
What is the significance of the output measure displayed in the third column in the figure?
a)
It is an important concept in economics.
b)
It is the same as the total product.
c)
It is only relevant in the long run.
d)
It is the number of workers.
e)
It is the total revenue.
68.
The measure of output shown in the third column in Figure 5.5 is an important _____________ in economics.
a)
concept
b)
variable
c)
number
d)
machine
e)
worker
69.
The measure of production detail found in the third column of the production table is described as holding what status within the field of economics?
a)
A vital theoretical element.
b)
A secondary variable for advanced analysis.
c)
A factor that is fixed in the short run.
d)
A reflection of the capital input.
e)
A measure of total costs.
70.
How is the marginal product defined in the text?
a)
The extra output or change in total product caused by adding one more unit of variable input.
b)
The total output produced by all workers.
c)
The fixed cost divided by the quantity produced.
d)
The total revenue minus the total cost.
e)
The average output per worker.
71.
The measure is marginal product, the extra output or change in total product caused by adding one more unit of _____________ input.
a)
variable
b)
fixed
c)
capital
d)
land
e)
average
72.
What economic term refers to the increase in total production that results from bringing on one additional unit of the flexible resource?
a)
Marginal product.
b)
Total revenue.
c)
Average cost.
d)
Fixed cost.
e)
Long-run product.
73.
What is the marginal product of the first worker according to the figure?
a)
7 units of extra output.
b)
1 unit of extra output.
c)
13 units of extra output.
d)
20 units of extra output.
e)
0 units of extra output.
74.
As we see in the figure, the marginal product, or extra output, of the first worker is _____________.
a)
7
b)
1
c)
13
d)
20
e)
38
75.
What is the quantity of additional production contributed by the hiring of the initial employee?
a)
The extra output is 7.
b)
The extra output is 1.
c)
The extra output is 13.
d)
The extra output is 20.
e)
The extra output is 0.
76.
What is the marginal product specifically for the second worker?
a)
13 units of output.
b)
7 units of output.
c)
20 units of output.
d)
0 units of output.
e)
1 unit of output.
77.
Likewise, the marginal product of the second worker is _____________.
a)
13
b)
7
c)
20
d)
27
e)
38
78.
How many units of additional output are attributed to the engagement of the second employee?
a)
13 units.
b)
7 units.
c)
20 units.
d)
0 units.
e)
1 unit.
79.
What key observation can be made about the marginal product across all workers in the figure?
a)
It is different for every worker, and some are negative.
b)
It is the same for every worker.
c)
It is always positive and increasing.
d)
It is always exactly 7.
e)
It is always equal to the total product.
80.
If you look down the column, you will see that the marginal product for every worker is different, with some even being _____________.
a)
negative
b)
positive
c)
zero
d)
equal
e)
constant
81.
A review of the marginal product figures reveals what characteristic across the entire workforce?
a)
The additional output varies per individual, and can be less than zero for some.
b)
The output contribution is uniform for each employee.
c)
All employees contribute an increasing amount of output.
d)
The marginal product never changes.
e)
Only the first worker has a positive contribution.
82.
What mathematical relationship is noted between marginal product and total product?
a)
The sum of the marginal products is equal to the total product.
b)
The marginal product is always greater than the total product.
c)
The total product is the average of all marginal products.
d)
The marginal product is calculated by dividing the total product by the number of workers.
e)
The sum of the marginal products is always negative.
83.
Finally, note that the sum of the marginal products is equal to the _____________ product.
a)
total
b)
average
c)
fixed
d)
variable
e)
net
84.
When all individual increases in output (marginal products) are added together, what is the resulting figure?
a)
The cumulative output produced (total product).
b)
The average output per worker.
c)
The difference between total revenue and total cost.
d)
The change in fixed costs.
e)
The sum of the variable inputs.
85.
What is the combined marginal product of the first and second workers, and what does this total equal?
a)
20, which is the total product for two workers.
b)
7, which is the total product for one worker.
c)
13, which is the marginal product of the second worker.
d)
38, which is the total product for three workers.
e)
2, which is the number of workers.
86.
For example, the marginal products of the first and second workers is 7 plus 13, or 20—the same as the total product for _____________ workers.
a)
two
b)
one
c)
three
d)
four
e)
five
87.
The addition of the first two workers' additional output (7 + 13) confirms which economic relationship?
a)
The total output for those two employees is 20.
b)
The marginal product is consistently increasing.
c)
The total cost is 20.
d)
The average product is 10.
e)
The firm is in Stage I.
88.
How is the total output of 38 for three workers derived from the marginal products?
a)
By summing their individual marginal products (7 + 13 + 18).
b)
By multiplying the number of workers by the first marginal product (3 x 7).
c)
By dividing the total product by the number of workers (38 / 3).
d)
By subtracting the first worker's marginal product from the total (38 - 7).
e)
By only adding the marginal product of the third worker (18).
89.
Likewise, the sum of the marginal products of the first three workers is 7 plus 13 plus 18, or 38—the total _____________ for three workers.
a)
output
b)
cost
c)
revenue
d)
profit
e)
input
90.
The cumulative marginal product of the first three workers (38) is equal to what measure for those three employees?
a)
Their total production.
b)
Their average product.
c)
Their total variable cost.
d)
Their total fixed cost.
e)
Their total revenue.
91.
In the short run, every firm faces the question of how many workers to hire.
a)
How many workers to hire.
b)
How many new factories to build.
c)
What new technology to implement.
d)
How much land to purchase.
e)
What price to charge for the product.
92.
In the short run, every firm faces the question of how many _____________ to hire.
a)
workers
b)
managers
c)
machines
d)
buildings
e)
competitors
93.
When operating in the short run, what critical staffing-related query confronts all companies?
a)
The optimal number of personnel to employ.
b)
The maximum profit possible.
c)
The fixed cost of production.
d)
The long-run average cost.
e)
The total market size.
94.
What three separate stages of production are revealed by analyzing Figure 5.5?
a)
Increasing returns, diminishing returns, and negative returns.
b)
Short run, long run, and equilibrium.
c)
High demand, low demand, and stable demand.
d)
High cost, low cost, and zero cost.
e)
Total product, marginal product, and average product.
95.
To answer this question, let us take another look at Figure 5.5, which shows three distinct stages of production: increasing returns, diminishing returns, and _____________ returns.
a)
negative
b)
zero
c)
positive
d)
neutral
e)
constant
96.
To determine the ideal number of employees, the text suggests examining the three phases of production, which are defined by what types of returns?
a)
Growing, shrinking, and detrimental marginal output.
b)
Fixed, variable, and total output.
c)
Supply, demand, and equilibrium.
d)
Price, cost, and profit.
e)
Short run, long run, and intermediate run.
97.
What is the title given to the first stage of production?
a)
Stage I—Increasing Marginal Returns.
b)
Stage I—Decreasing Total Product.
c)
Stage I—Negative Marginal Product.
d)
Stage I—Constant Average Returns.
e)
Stage I—Fixed Costs.
98.
The first stage of production is called Stage I—Increasing _____________ Returns.
a)
Marginal
b)
Total
c)
Average
d)
Capital
e)
Labor
99.
The initial phase of production is characterized by what trend in marginal output?
a)
An upward trend in the additional production gained from each worker.
b)
A downward trend in total output.
c)
A state where no additional output is gained.
d)
A constant, unchanging level of returns.
e)
A trend toward negative returns.
100.
What happens to the marginal product of each new worker during Stage I of the production function?
a)
It increases.
b)
It decreases.
c)
It remains constant.
d)
It becomes negative.
e)
It is equal to the average product.
101.
Stage I of the production function is the phase in which the marginal product of each additional worker _____________.
a)
increases
b)
decreases
c)
stays the same
d)
is zero
e)
becomes negative
102.
The defining characteristic of the first production stage is the consistent rise in which specific metric?
a)
The extra output contributed by every subsequent employee.
b)
The total quantity of goods produced.
c)
The overall cost of the variable input.
d)
The average revenue of the firm.
e)
The amount of fixed capital used.
103.
What is the reason given for the increasing marginal returns in Stage I?
a)
Workers can cooperate to make better use of their equipment.
b)
The equipment is constantly being updated.
c)
The price of the product is increasing.
d)
The cost of labor is decreasing.
e)
The total product is falling.
104.
This happens because as more workers are added, they can cooperate with each other to make better use of their _____________.
a)
equipment
b)
time
c)
wages
d)
competitors
e)
customers
105.
The text attributes the growing productivity of new workers (Increasing Marginal Returns) to what factor?
a)
Enhanced teamwork enabling more effective utilization of tools.
b)
The firm purchasing more fixed capital.
c)
The decrease in total number of workers.
d)
The move to a larger factory.
e)
The lowering of the selling price.
106.
According to Figure 5.5, what is the output level of the first worker?
a)
7 units of output.
b)
1 unit of output.
c)
13 units of output.
d)
20 units of output.
e)
0 units of output.
107.
As we see in Figure 5.5, the first worker produces _____________ units of output.
a)
7
b)
1
c)
13
d)
20
e)
38
108.
What is the total production amount attributed solely to the hiring of the initial employee?
a)
7 units of production.
b)
1 unit of production.
c)
13 units of production.
d)
20 units of production.
e)
0 units of production.
109.
How does the productivity of the second worker compare to the first, and what is the new total output?
a)
The second is more productive (MP of 13), bringing total production to 20.
b)
The second is less productive (MP of 7), bringing total production to 14.
c)
The second is equally productive (MP of 7), bringing total production to 14.
d)
The second is unproductive (MP of 0), bringing total production to 7.
e)
The second causes total production to fall below 7.
110.
The second is even more productive, with a marginal product of 13 units, bringing total production to _____________.
a)
20
b)
7
c)
13
d)
27
e)
38
111.
The text indicates that the second worker's output contribution is 13, resulting in a firm-wide output of what amount?
a)
A cumulative output of 20 units.
b)
A reduction in output to 7 units.
c)
A cumulative output of 13 units.
d)
An output of 7 units for the second worker.
e)
An output of 33 units for the second worker.
112.
Under what condition does total output increase at an accelerating pace?
a)
As long as each new worker contributes more to total output than the worker before.
b)
When the marginal product is negative.
c)
When the total product is decreasing.
d)
When the firm is in the long run.
e)
When the average product is zero.
113.
As long as each new worker contributes more to total output than the worker before, total output rises at an _____________ rate.
a)
increasing
b)
decreasing
c)
constant
d)
zero
e)
variable
114.
What is the effect on the rate of growth of total production if each subsequent worker adds a progressively larger amount of output?
a)
Total output expands at a faster rate.
b)
Total output expands at a slower rate.
c)
Total output remains constant.
d)
Total output begins to decline.
e)
Total output is optimized.
115.
How many workers are included in Stage I of the production function, according to the figure?
a)
The first five workers.
b)
The first six workers.
c)
The first ten workers.
d)
Only the first worker.
e)
Zero workers.
116.
According to the figure, the first _____________ workers are in Stage I.
a)
five
b)
six
c)
ten
d)
three
e)
twelve
117.
Which group of employees belongs to the phase of Increasing Marginal Returns (Stage I), based on the provided data?
a)
Workers numbered 1 through 5.
b)
Workers numbered 6 through 10.
c)
Workers numbered 11 and 12.
d)
Only the sixth worker.
e)
Workers 1 through 10.
118.
What is a company's typical stance regarding intentionally producing within Stage I of the production function?
a)
Companies do not knowingly produce in Stage I.
b)
Companies aim to stay in Stage I as long as possible.
c)
Companies only produce in Stage I.
d)
Companies have no choice but to produce in Stage I.
e)
Companies maximize profit in Stage I.
119.
When it comes to hiring workers, companies do not knowingly produce in _____________.
a)
Stage I
b)
Stage II
c)
Stage III
d)
the long run
e)
the short run
120.
The text suggests that companies typically avoid what production stage as a deliberate, final operating point?
a)
The phase of increasing marginal returns.
b)
The phase of diminishing marginal returns.
c)
The phase of negative marginal returns.
d)
The period known as the long run.
e)
The period known as the short run.
121.
What is a firm's response when it notices that each additional worker is increasing output more than the previous one?
a)
It attempts to hire yet another worker.
b)
It stops hiring immediately.
c)
It fires the last worker hired.
d)
It switches to the long run.
e)
It invests in more machinery.
122.
When a firm learns that each new worker increases output more than the last, it tries to hire yet another _____________.
a)
worker
b)
machine
c)
factory
d)
customer
e)
product
123.
In a situation where the marginal product is accelerating (increasing), what is the company's natural tendency regarding its labor force?
a)
To continue expanding the workforce by hiring more employees.
b)
To decrease the number of employees.
c)
To maintain the current number of employees.
d)
To switch from labor to capital.
e)
To change the fixed inputs.
124.
What is the consequence of a firm continuously hiring workers when marginal returns are increasing?
a)
The firm soon moves into the next stage of production (Stage II).
b)
The firm remains permanently in Stage I.
c)
The firm immediately enters the long run.
d)
The firm's total output falls to zero.
e)
The firm goes out of business.
125.
Soon, the firm finds itself in the next _____________ of production.
a)
stage
b)
country
c)
market
d)
building
e)
technology
126.
The process of adding workers while marginal returns are rising inevitably leads the company to transition into which phase?
a)
The subsequent period in the production cycle.
b)
The final stage of negative returns.
c)
The long-run period.
d)
The beginning of its operations.
e)
A period of constant returns.
127.
What is the title given to the second stage of production?
a)
Stage II—Decreasing Marginal Returns.
b)
Stage II—Increasing Total Product.
c)
Stage II—Negative Marginal Product.
d)
Stage II—Constant Average Returns.
e)
Stage II—Fixed Costs.
128.
The second stage of production is called Stage II—Decreasing _____________ Returns.
a)
Marginal
b)
Total
c)
Average
d)
Capital
e)
Labor
129.
The central feature of the second production phase is characterized by what trend in marginal output?
a)
A downward trend in the additional output contributed by each worker.
b)
An upward trend in total output.
c)
A zero level of returns.
d)
A trend toward increasing returns.
e)
A trend of constant returns.
130.
How does the growth of total production behave in Stage II?
a)
It keeps growing, but by smaller and smaller amounts.
b)
It decreases rapidly.
c)
It remains constant.
d)
It grows at an increasing rate.
e)
It stops growing entirely.
131.
In Stage II, the total production keeps growing, but it does so by smaller and smaller _____________.
a)
amounts
b)
costs
c)
workers
d)
factories
e)
prices
132.
Despite the ongoing expansion of total output in the second stage, what is notable about its rate of increase?
a)
The increase in total production becomes progressively smaller.
b)
The increase in total production becomes progressively larger.
c)
The rate of increase is fixed.
d)
The increase stops completely.
e)
The total output starts to fall.
133.
What type of contribution does each new worker make to total output during Stage II?
a)
A diminishing, but still positive, contribution.
b)
A diminishing and negative contribution.
c)
An increasing and positive contribution.
d)
A constant and zero contribution.
e)
No contribution at all.
134.
Each additional worker, then, is making a diminishing, but still _____________, contribution to total output.
a)
positive
b)
negative
c)
zero
d)
fixed
e)
neutral
135.
The contribution of each worker hired in Stage II is described as being reduced, yet still maintaining what characteristic?
a)
The contribution to overall production remains a net gain.
b)
The contribution is exactly zero.
c)
The contribution is constantly increasing.
d)
The contribution is detrimental to the firm.
e)
The contribution is fixed and measurable.
136.
What economic principle is illustrated by Stage II, and how is it defined?
a)
The principle of decreasing/diminishing returns, where output increases at a diminishing rate as more variable inputs are added.
b)
The principle of increasing returns, where output grows at an increasing rate.
c)
The principle of negative returns, where total output decreases.
d)
The principle of constant returns, where output grows at a fixed rate.
e)
The principle of supply and demand, where price changes.
137.
Stage II illustrates the principle of decreasing or diminishing returns—the stage where output increases at a _____________ rate as more variable inputs are added.
a)
diminishing
b)
increasing
c)
fixed
d)
zero
e)
negative
138.
The term "diminishing returns" describes the second production stage, specifically referencing what outcome of continually adding the variable input?
a)
Total production grows at a slowing speed.
b)
Total production starts to decrease.
c)
Total production remains constant.
d)
Total production grows very quickly.
e)
Total output equals the input.
139.
Based on Figure 5.5, when does Stage II start, and what is the reason?
a)
When the sixth worker is hired, because their marginal product (20) is less than the fifth worker's (28).
b)
When the first worker is hired, because their marginal product is 7.
c)
When the fifth worker is hired, because their marginal product is 28.
d)
When the total product reaches its maximum.
e)
When the marginal product becomes negative.
140.
In Figure 5.5, Stage II begins when the _____________ worker is hired, because the 20- unit marginal product of that worker is less than the 28- unit marginal product of the fifth worker.
a)
sixth
b)
first
c)
fifth
d)
eleventh
e)
third
141.
The transition to Stage II is marked by the engagement of the sixth worker for what quantitative reason?
a)
The sixth worker's added output (20 units) is lower than the previous worker's added output (28 units).
b)
The sixth worker's total output is 20.
c)
The sixth worker has a marginal product of zero.
d)
The fifth worker's total output is 28.
e)
The sixth worker has the highest marginal product.
142.
What event marks the conclusion of Stage II, and what is the underlying reason?
a)
The tenth worker is added, because marginal products become zero or negative afterward.
b)
The sixth worker is added, because marginal product starts decreasing.
c)
The total product reaches its maximum.
d)
The firm runs out of money.
e)
All resources become variable.
143.
The stage ends when the _____________ worker is added, because marginal products are no longer positive after that point.
a)
tenth
b)
fifth
c)
sixth
d)
eleventh
e)
first
144.
The second production stage is considered complete upon the hiring of the tenth employee, due to what subsequent change in output?
a)
The contribution to total production stops being a positive number.
b)
The contribution to total production increases.
c)
The total product starts to increase.
d)
The total product reaches its lowest point.
e)
The total cost is minimized.
145.
What is the title given to the third stage of production?
a)
Stage III—Negative Marginal Returns.
b)
Stage III—Increasing Total Product.
c)
Stage III—Diminishing Returns.
d)
Stage III—Constant Average Returns.
e)
Stage III—Fixed Costs.
146.
The third stage of production is called Stage III—_____________ Marginal Returns.
a)
Negative
b)
Positive
c)
Increasing
d)
Diminishing
e)
Constant
147.
The final production phase is defined by what specific outcome in marginal output?
a)
A detrimental or less-than-zero contribution to total output from new workers.
b)
A steady increase in total output.
c)
A period of maximum profit.
d)
A fixed level of production.
e)
The lowest total cost for the firm.
148.
What is the consequence if a firm hires an excessive number of workers?
a)
Workers impede each other, causing total output to fall.
b)
Workers become more efficient, causing total output to rise.
c)
Total output remains constant.
d)
The firm's fixed costs increase.
e)
Marginal product becomes constant.
149.
If the firm hires too many workers, they will get in each other’s way, causing output to _____________.
a)
fall
b)
rise
c)
stabilize
d)
double
e)
peak
150.
The decline in total production that characterizes Stage III is caused by what phenomenon among the labor force?
a)
Overcrowding leading to inefficiency and decreased production.
b)
Increased specialization among employees.
c)
Improved communication between workers.
d)
Decreased demand for the product.
e)
The removal of all fixed costs.
151.
What is the outcome of the eleventh and twelfth workers' marginal products (minus three and minus 10)?
a)
They cause the total output to fall.
b)
They cause the total output to increase rapidly.
c)
They cause the marginal product to increase.
d)
They cause the firm to leave Stage III.
e)
They cause the total product to reach its maximum.
152.
For example, the eleventh worker has a marginal product of minus three, and the twelfth’s is minus 10, causing output to _____________.
a)
fall
b)
rise
c)
stabilize
d)
zero out
e)
peak
153.
The addition of the eleventh and twelfth employees, whose contributions are negative, results in what overall effect on the firm's production?
a)
A reduction in the overall quantity of goods produced.
b)
A significant increase in the total production.
c)
A zero net change in production.
d)
A move back into Stage I.
e)
A constant output level.
154.
In which stage of production can the optimal number of workers a firm hires generally be found, and why?
a)
Stage II, because companies typically stop hiring before total production decreases (Stage III).
b)
Stage I, because marginal product is increasing.
c)
Stage III, because marginal product is negative.
d)
The long run, because all factors are variable.
e)
Stage I or Stage III only.
155.
Because most companies would not hire workers if this would cause total production to decrease, the number of workers a firm hires can only be found in _____________.
a)
Stage II
b)
Stage I
c)
Stage III
d)
the short run
e)
the long run
156.
Assuming a company seeks to avoid an absolute reduction in output, where must its final hiring decision fall within the stages of production?
a)
Within the boundaries of Stage II.
b)
Solely within the boundaries of Stage I.
c)
Within the boundaries of Stage III.
d)
In the transition from long run to short run.
e)
Before any production starts.
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