Question

QUESTION 15

Which of the following statements about production curves is NOT true?

	A.	Average product cannot be negative
	B.	Marginal product cannot be negative
	C.	Total product cannot be negative
	D.	Total product can increase or decrease as more of an input is used

QUESTION 16

Last year, your construction company built 25 house using 50 tons of concrete. What is the average product of the concrete input?

	A.	2 houses per ton
	B.	0.5 houses per ton
	C.	4 houses per ton
	D.	0.25 houses per ton

QUESTION 17

If the marginal product of labor increases as you hire more people, what is the expected impact of using more labor on your marginal cost of production?

	A.	There is no relationship between marginal product and marginal cost
	B.	Marginal cost increases
	C.	Marginal cost declines

QUESTION 18

How do we define the law of diminishing marginal productivity?

	A.	Marginal product increases at a decreasing rate
	B.	Marginal product increases at an increasing rate
	C.	Margnal product decreases at a decreasing rate
	D.	Marginal product decreases at an increasing rate

QUESTION 19

If marginal product is negative, what do we know about the total product curve?

	A.	Total product is upward sloping at an increasing rate
	B.	Total product is upward sloping at a decreasing rate
	C.	Total product curve is downward sloping
	D.	Total product is negative

QUESTION 20

You manage an auto assembly factory, and your team can assemble an extra 60 cars if they put in two hours of overtime effort. Is the marginal product of labor positive or negative?

	A.	Zero
	B.	Negative
	C.	Positive

Answer 1

15. B) Marginal product cannot be negative.

There can be negative marginal product due to decreasing marginal product.

16. B) 0.5 houses per ton

Since 50 tons of concrete produces 25 houses, 1 ton of concrete produces 25/50 = 0.5 houses

17. A) There is no relationship between marginal cost and marginal revenue

18. A) Marginal product increases at a decreasing rate

19. C) Total product curve is downward sloping.

When marginal product becomes negative then the total product decreases and hence it becomes downward sloping.

20. C) Positive