Chapter 5 Production Theory

Long run refers to a time period in which

• all inputs cannot be increased

• all inputs can be increased

• there is at least one variable input

• there is at least one fixed input

What is the most efficient stage of production?

• stage 1

• stage 2

• stage 3

• stage 4

TP reach its maximum point, when

• AP maximum

• MP maximum

• AP and MP are intersect

• MP equal to zero

Which one of the following is NOT a variable input ?

• factory worker

• raw materials

• efficient managers

• offices

When plotting marginal and average product curves, the ______ product curve always crosses the _____ product curve at its _____.

• average variable; marginal; maximum

• average variable; average total; minimum

• marginal; average total; maximum

• marginal; average variable; minimum

The law of diminishing returns indicates that

• extra units of a variable recourse are added to fixed resource the extra or marginal product will decline beyong same point

• because the economics and diseconomies of scale a competitive firm's long-run average cost curve will be u-shaped

• the demand for goods produced by purely competitively industries is downsloping

• beyond some point the extra utility derived from additional units of product will yield the consumer smaller and smaller extra amounts of satisfaction

Formula for Marginal Product (MP) is:

Total product is

• The Quality of input

• The Quality of Output

• The Quantity of Output

• The Quantity of input

The relationship between the factors of production and the output of goods and services.

• Marginal Product

• Law of variable proportions

• Production Function

• Stages of Production

An increase in total production due to an increase of one unit of variable input is known as _____________________.

• Marginal cost

• Average cost

• Marginal product

• Average product