AGR553 CHAPTER 2

What is the production function in agriculture?

• A way to maximize profit

• A systematic relation between resource input and output

• A method for determining labor requirements

• A tool to measure economic fluctuations

In agricultural economics, what does the term "marginal" refer to?

• Average changes in production

• Incremental or additional changes that occur at the margin

• Fixed costs in production

• Decreasing returns

What does the abbreviation TPP represent in the context of agricultural production?

• Total Physical Product

• Total Productive Potential

• Total Product Pricing

• Total Physical Pricing

How is Average Physical Product (APP) calculated in agricultural production?

• By dividing Total Physical Product (TPP) by the input level

• By dividing TPP by labor hours

• By dividing Marginal Physical Product (MPP) by the input level

• By dividing MPP by labor costs

What does Marginal Physical Product (MPP) measure in agricultural production?

• The total production in monetary terms

• The additional production generated by using an additional unit of input

• The average production cost

• The labor costs for each product

Which of the following is an example of a variable input in agricultural production?

• The area of land a farmer has

• Fixed assets such as buildings

• The amount of labor used

• The machinery investment

According to the Law of Diminishing Returns, what happens when additional units of a variable input are added to fixed inputs?

• Total product will increase indefinitely

• The output will increase at a decreasing rate

• Total product will decrease initially

• The output will remain the same

What does the term 'short-run' refer to in agricultural production?

• A period when all inputs are variable

• A period when at least one input is fixed

• A time when all costs are covered

• A period when no production takes place

Which statement describes Stage I of production in agricultural economics?

• It is characterized by decreasing returns on all inputs

• It is characterized by an increase in both Average Physical Product (APP) and Marginal Physical Product (MPP)

• It is characterized by a decrease in Total Physical Product (TPP)

• It is characterized by MPP being lower than APP

In agricultural production, which stage is considered the rational stage for production?

• Stage I

• Stage II

• Stage III

• All stages