ECO100Y5 Chapter Notes - Chapter 11: Average Cost, Average Variable Cost, Marginal Product

A short-run production function assumes that

A. the level of output is fixed.

B. at least one input is a fixed input.

C. all inputs are fixed inputs.

D. all inputs can be varied.

1. The slope of the total product curve measures

a. the marginal rate of technical substitution.

b. marginal product.

c. average product.

d. the maximum average product.

e. minimum product.

2. The Law of Diminishing Returns to a variable input (such as labor) assumes that

a. there is at least one fixed input.

b. all inputs are changed by the same percentage.

c. the firm is operating in the short run.

d. all inputs are held constant.

e. a and c.

3. An isoquant curve identifies

a. the maximum output possible, given a fixed budget.

b. the different combinations of goods the can be produced, given fixed amounts of inputs.

c. the different combinations of inputs that can be used to produce a fixed rate of output.

d. none of the above.

4. The ratio of total productivity to the total quantity of a variable input being used in production is

a. equal to marginal physical productivity of the input.

b. constant as employment levels of the input vary.

c. equal to average physical productivity of the input.

d. equal to the marginal rate of technical substitution.

1) Marginal product of labour is the increase in total product that results from a A) one-unit increase in both the quantity of variable and fixed inputs. B) one-unit increase in the quantity of fixed inputs employed, holding the quantity of the variable inputs constant. 1 percent change in the quantity of labour and the quantity of capital employed. D) one-unit increase in the quantity of labour employed, other inputs remaining the same. E) change in the cost of labour.