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The Costs of Production

51. When adding another unit of labor leads to an
increase in output that is smaller than increases in output that resulted from
adding previous units of labor, we have the property of

a. diminishing
labor.

b. diminishing
output.

c. diminishing
marginal product.

d. negative
marginal product.

The
figure below depicts a production function for a firm that produces cookies.
Use the figure to answer questions 52 and 53.

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52. As the number of workers increases,

a. total
output increases, but at a decreasing rate.

b. marginal
product increases, but at a decreasing rate.

c. marginal
product increases at an increasing rate.

d. total
output decreases.

53. With regard to cookie production, the figure
implies

a. diminishing
marginal product of workers.

b. diminishing
marginal cost of cookie production.

c. decreasing
cost of cookie production.

d. increasing
marginal product of workers.

54. Which of the following statements about a
production function is correct for a firm that uses labor to produce output?

a. The
production function depicts the relationship between the quantity of labor and
the quantity of output.

b. The
slope of the production function measures marginal cost.

c. The
quantity of output is measured along the horizontal axis.

d. All
of the above are correct.

The
figure below depicts a total cost function for a firm that produces cookies.
Use the figure to answer questions 55 through 58.

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55. Which
of the following is true of the production function (not pictured) that
underlies this total cost function?

(ii) Total
output increases as the quantity of inputs increases, but at a decreasing rate.

(ii) Marginal
product is diminishing for all levels of input usage.

(iii) The
slope of the production function decreases as the quantity of inputs increases.

a. (i)
only

b. (ii)
and (iii)

c. (i)
and (iii)

d. All
of the above are correct.

56. The changing slope of the total cost curve
reflects

a. decreasing
average variable cost.

b. decreasing
average total cost.

c. decreasing
marginal product.

d. increasing
fixed cost.

57. Which of the following statements best
captures the nature of the underlying production function?

a. Output
increases at a decreasing rate with additional units of input.

b. Output
increases at an increasing rate with additional units of input.

c. Output
decreases at a decreasing rate with additional units of input.

d. Output
decreases at an increasing rate with additional units of input.

58. Which of the statements below is most
consistent with the shape of the total cost curve?

a. Producing
an additional cookie is always more costly than producing the previous cookie.

b. Total
production of cookies decreases with additional units of input.

c. Producing
additional cookies is equally costly, regardless of how many cookies are
already being produced.

d. Producing
additional cookies becomes increasingly costly only when the number of cookies
already being produced is large.

59. Which of these assumptions is often realistic
for a firm in the short run?

a. The
firm can vary both the size of its factory and the number of workers it
employs.

b. The
firm can vary the size of its factory, but not the number of workers it
employs.

c. The
firm can vary the number of workers it employs, but not the size of its
factory.

d. The
firm can vary neither the size of its factory nor the number of workers it
employs.

60. Assume a certain firm regards the number of
workers it employs as variable, and that it regards the size of its factory as
fixed. This assumption is often realistic

a. in
the short run, but not in the long run.

b. in
the long run, but not in the short run.

c. both
in the short run and in the long run.

d. neither
in the short run nor in the long run.