Question 1

Suppose a firm’s production function is given by $$Q = f(L, K)$$, where $$L is $$labor and $$K is $$capital. If the firm increases labor while holding capital constant, which concept best describes the change in output from hiring one more worker?

Accepted Answer

Marginal product of labor

Question 2

A firm is deciding whether to produce in the short run. Which of the following conditions must be met for the firm to continue producing?

Accepted Answer

Price is greater than average variable cost

Question 3

Consider the production function $$Q = f(L, K). If $$the marginal product of labor ($$MPL) is $$decreasing as more labor is added, which economic principle is being illustrated?

Accepted Answer

Diminishing marginal product of labor

Question 4

A bakery finds that when it hires an additional worker, output increases from 100 to 120 loaves per day. What is the marginal product of labor ($$MPL) $$for this worker?

Accepted Answer

$$MPL = 20$$

Question 5

Which of the following best describes the difference between short run and long run production decisions?

Accepted Answer

In the short run, at least one input is fixed; in the long run, all inputs are variable.

Question 6

If a firm’s marginal product of labor ($$MPL) is $$given by $$MPL = \frac{\Delta Q}{\Delta L}$$, what does $$\Delta Q$$ represent?

Accepted Answer

Change in output

Question 7

A factory can hire more workers, but its machinery is fixed in the short run. If each additional worker adds less output than the previous one, what is this an example of?

Accepted Answer

Diminishing marginal product of labor

Question 8

Given the production function $$Q = f(L, K)$$, which of the following would NOT shift the production function upward?

Accepted Answer

A decrease in the amount of capital available

Question 9

If a firm’s marginal product of labor ($$MPL) is $$positive but decreasing, what happens to total output as more labor is added?

Accepted Answer

Total output increases at a decreasing rate

Question 10

A firm is considering shutting down in the short run. Which of the following scenarios would justify this decision?

Accepted Answer

Price is less than average variable cost

Question 11

Suppose a firm’s production function is $$Q = 10L + 5K. If $$the firm increases $$L$$ from 2 to 3 while keeping $$K$$ constant at 4, what is the marginal product of labor ($$MPL$$)?

Accepted Answer

$$MPL = 10$$

Question 12

Which of the following statements about the diminishing marginal product of labor is correct?

Accepted Answer

It occurs when each additional worker produces less additional output than the previous one.

Question 13

If a firm’s production function exhibits diminishing marginal returns to labor, what will happen to the marginal product of labor ($$MPL) as $$more labor is added?

Accepted Answer

$$MPL$$ will decrease

Question 14

A firm’s production function is $$Q = f(L, K). In $$the short run, which input is typically considered fixed?

Accepted Answer

Capital ($$K)$$

Question 15

If a firm’s marginal product of labor ($$MPL) is $$zero, what does this imply about the effect of hiring an additional worker?

Accepted Answer

Total output will remain unchanged

Question 16

Which of the following is a reason why a firm might experience diminishing marginal product of labor?

Accepted Answer

Fixed capital limits the productivity of additional workers

Question 17

A firm’s production function is $$Q = f(L, K). If $$both $$L$$ and $$K$$ are increased by 10%, and output increases by less than 10%, what does this indicate?

Accepted Answer

Decreasing returns to scale

Question 18

If a firm’s marginal product of labor ($$MPL) is $$given by $$MPL = \frac{\Delta Q}{\Delta L}$$, and $$\Delta Q = 15$$ when $$\Delta L = 3$$, what is $$MPL$$?

Accepted Answer

$$MPL = 5$$

Question 19

Which of the following best describes the production function?

Accepted Answer

A relationship between the quantity of inputs used and the quantity of output produced

Production Functions and Marginal Product Concepts in Economics

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