Managerial Economics by Christopher Thomas 13th Edition-Test Bank

Managerial Economics by Christopher Thomas 13th Edition-Test Bank

Chapter 8: PRODUCTION AND COST IN THE SHORT RUN

Multiple Choice

8-1 Fill out the table and answer the question below.

Units of Labor Total
Product Average Product Marginal Product
1
2
3
4
5
6
7
____
____
66
____
____
78
____ 20
____
____
____
16
____
10 ____
30
____
10
____
____
____

The average product of labor when 4 units of labor are employed is
a. 22.
b. 20.
c. 19.
d. 16.
Answer: c
Difficulty: 01 Easy
Topic: Production in the Short Run
AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 08-02

8-2 Fill out the table and answer the question below.

Units of Labor Total
Product Average Product Marginal Product
1
2
3
4
5
6
7
____
____
66
____
____
78
____ 20
____
____
____
16
____
10 ____
30
____
10
____
____
____

The marginal product of the fifth unit of labor is
a. 16.
b. 10.
c. 4.
d. 2.
Answer: c
Difficulty: 02 Medium
Topic: Production in the Short Run
AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 08-02

8-3 Fill out the table and answer the question below.

Units of Labor Total
Product Average Product Marginal Product
1
2
3
4
5
6
7
____
____
66
____
____
78
____ 20
____
____
____
16
____
10 ____
30
____
10
____
____
____

Diminishing returns begin with the
a. first unit of labor.
b. third unit of labor.
c. fourth unit of labor.
d. sixth unit of labor.
Answer: b
Difficulty: 02 Medium
Topic: Production in the Short Run
AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 08-02

8-4 Fill out the table and answer the question below.

Units of Labor Total
Product Average Product Marginal Product
1
2
3
4
5
6
7
____
____
66
____
____
78
____ 20
____
____
____
16
____
10 ____
30
____
10
____
____
____

Marginal product is negative when _____ units of labor are employed.
a. 5 units of labor are employed.
b. 6 units of labor are employed.
c. 7 units of labor are employed.
d. both b and c.
Answer: d
Difficulty: 02 Medium
Topic: Production in the Short Run
AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 08-02

8-5 A production function measures the relation between
a. input prices and output prices.
b. the quantity of inputs and the quantity of output.
c. input prices and the quantity of output.
d. the quantity of inputs and input prices.
e. none of the above
Answer: b
Difficulty: 01 Easy
Topic: Some General Concepts in Production and Cost
AACSB: Reflective Thinking
Blooms: Remember
Learning Objective: 08-01

8-6 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. both a and b
e. both b and c
Answer: b
Difficulty: 01 Easy
Topic: Some General Concepts in Production and Cost
AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 08-01

8-7 Given the table below, if capital is fixed at two units, what is the marginal product of the fourth unit of labor?

Units of Capital
1 2 3

Units
of
Labor 1
2
3
4
5
6 80
180
270
340
390
410 100
220
330
420
490
530 120
260
390
500
590
650
Amount of total output produced from various combinations of labor and capital.

a. 60
b. 80
c. 100
d. 420
e. none of the above
Answer: e
Difficulty: 01 Easy
Topic: Production in the Short Run
AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 08-02