Free Practice Quiz Question List

1 Production Functions and Returns Online Quiz Questions

Use this free practice quiz with 20 questions to review 1 Production Functions and Returns, test your knowledge, and prepare for your next test or exam.

20 questions

Choose one

1 point

What does a production function describe?

A
The total spending required to purchase a particular combination of inputs
B
The maximum output obtainable from specified inputs given current technology and production methods
C
The amount of a product consumers will buy at each possible price
D
The market price of the inputs used in production

True or false

1 point

The short run always lasts less than one year.

A
True
B
False

Written response

1 point

What is the economic term for the amount produced with a given combination of inputs? Enter the term.

Fill in the blank

1 point

Complete the formula for the marginal product of labor: $MP_L =$ .

Choose one

1 point

A bakery adds workers while keeping its ovens and workspace fixed. Which situation could explain an initial rise in the workers' marginal product?

A
The first workers may have to wait more often as the bakery becomes busier.
B
Total output must fall as soon as the bakery hires another worker.
C
Workers may specialize or use fixed equipment more fully, raising the marginal product of early hires.
D
The bakery has increasing returns to scale because only its labor input changes.

Written response

1 point

A bakery's daily total product is 24 loaves with 2 workers and 36 loaves with 3 workers. What is the marginal product of the third worker? Enter the number of loaves per added worker.

Written response

1 point

What is the economic term for a period in which a firm can vary all of its inputs? Enter the term.

Fill in the blank

1 point

Complete the statements. With at least one input fixed, adding more units of a variable input will eventually that input's marginal product. This principle is called the law of .

Choose all

1 point

Select all cases that show increasing returns to scale.

A
A firm doubles all inputs and output more than doubles.
B
A firm doubles labor while keeping capital fixed, and output more than doubles.
C
A firm increases all inputs by the same proportion, and output increases by a greater proportion.
D
A firm doubles all inputs and output increases by less than double.

True or false

1 point

When an input's marginal product diminishes, total product must fall.

A
True
B
False

Choose all

1 point

Select all statements that correctly describe the relationship between marginal product and total product.

A
Marginal product measures the additional output from an additional unit of an input, holding other inputs constant.
B
On a graph, marginal product corresponds to the slope of the total-product curve.
C
If marginal product diminishes, total product must already be falling.
D
If marginal product remains positive, total product continues to rise.

Open ended

1 point

Explain how diminishing marginal returns differ from returns to scale. Include what happens to total product when marginal product is diminishing but still positive, and give an example of a returns-to-scale outcome.

Choose one

1 point

A firm's marginal product is positive but declining as it adds units of a variable input. What happens to total product?

A
Total product falls at an increasing rate.
B
Total product rises at a decreasing rate.
C
Total product stays constant.
D
Total product rises at an increasing rate.

True or false

1 point

True or false: A production function, by itself, shows a firm's input costs and the price of its product.

A
True
B
False

Choose one

1 point

A bakery's production function is written as $Q=f(L,K)$ . What does this function describe?

A
The amount the firm will produce at every possible product price
B
The maximum output obtainable from specified inputs with current technology
C
The least-cost combination of inputs for every possible output level
D
The price the firm must pay for each unit of labor and capital

Choose one

1 point

A bakery can adjust its staffing quickly but cannot change its building or install another oven during the period being considered. Which statement best describes this situation?

A
It is a period in which the firm cannot change any input.
B
It is always a period of less than one year.
C
It is a period in which at least one input is fixed.
D
It is a period in which all inputs must change.

Choose one

1 point

A firm adds workers while keeping its machinery fixed. The marginal product of labor falls but remains positive. What happens to total output?

A
Total output keeps rising, but by smaller amounts with each additional worker.
B
Total output immediately starts falling as soon as marginal product diminishes.
C
Each additional worker adds more output than the previous worker.
D
The firm must be experiencing decreasing returns to scale.

Choose one

1 point

A firm doubles labor, capital, and all other inputs, and its output more than doubles. Which production pattern does this show?

A
Constant returns to scale
B
Diminishing marginal returns
C
Decreasing returns to scale
D
Increasing returns to scale

Choose one

1 point

A firm pays a constant wage, and labor is its only variable input. If labor's marginal product diminishes, what tends to happen to marginal cost, other relevant conditions unchanged?

A
Marginal cost tends to fall because each unit of labor produces less output.
B
Marginal cost tends to rise because more labor is needed for each additional unit of output.
C
Marginal cost remains constant because the wage is unchanged.
D
Marginal cost becomes zero when marginal product diminishes.

Written response

1 point

A production function gives a bakery’s maximum output for specified inputs and current technology. To assess whether producing that output is profitable, what two kinds of information—beyond the production function itself—are needed? Enter both items separated by a semicolon.

1 Production Functions and Returns Online Quiz Questions

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