Answers to Quiz 4-7

Answers to MC Problem 4

Chapter 8: Production and Cost in the Short Run

Chapter 9: Production and Cost in the Long Run

The correct answers are marked red.

1 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

The next 2 questions refer to the following:

Amount of total output produced from various combinations of labor and capital.

  |   | Units of Capital |

  |   | 1 | 2 | 3 |

 UnitsofLabor | 123456 |  80180270340390410 | 100220330420490530 | 120260390500590650 |

2 If capital is fixed at two units, what is the marginal product of the fourth unit of labor?

a. 60

b. 80

c. 100

d. 420

e. none of the above

3 If labor is fixed at three units, how much does the third unit of capital add to total output?

 a. 60

 b. 80

 c. 110

 d. 130

 e. none of the above

4 If average product is increasing, then marginal product

1. must be greater than average product.

2. must be less than average product.

3. must be increasing.

4. cannot be decreasing.

5. both a and c

5 Suppose that you run a house-painting company and currently have 2 workers painting a total of 4 houses per month. If you hire a third worker, 6 houses can be painted per month. If you hire a fourth worker, 9 houses can be painted, and a fifth and sixth worker will increase the number of houses painted to 13 and 15, respectively. Diminishing returns

a. set in when the fourth worker is hired.

b. set in when the fifth worker is hired.

c. set in when the sixth worker is hired.

d. have not yet set in because output is still increasing.

6 The marginal product of labor

1. measures how output changes as the wage rate changes.

2. is less than the average product of labor when the average product of labor is decreasing.

3. is negative when adding another unit of...