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Production Theory

Description: This quiz covers the fundamental concepts and theories related to production theory in microeconomics. Test your understanding of production functions, isoquants, marginal productivity, and related topics.
Number of Questions: 14
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Tags: production theory microeconomics production functions isoquants marginal productivity
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In production theory, what is the relationship between inputs and outputs?

  1. Inputs are inversely related to outputs.

  2. Inputs are directly related to outputs.

  3. Inputs are unrelated to outputs.

  4. The relationship between inputs and outputs is indeterminate.

Show answer
Correct Option: B
Explanation:

In production theory, the relationship between inputs and outputs is typically positive, meaning that as more inputs are used, more outputs are produced.

What is a production function?

  1. An equation that shows the relationship between inputs and outputs.

  2. A graph that shows the relationship between inputs and outputs.

  3. A table that shows the relationship between inputs and outputs.

  4. A mathematical model that shows the relationship between inputs and outputs.

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Correct Option: D
Explanation:

A production function is a mathematical model that describes the relationship between inputs (such as labor and capital) and outputs (such as goods and services).

What is an isoquant?

  1. A curve that shows all combinations of inputs that produce the same output.

  2. A curve that shows all combinations of outputs that require the same inputs.

  3. A curve that shows all combinations of inputs and outputs that are efficient.

  4. A curve that shows all combinations of inputs and outputs that are feasible.

Show answer
Correct Option: A
Explanation:

An isoquant is a curve that shows all combinations of inputs that produce the same output, holding technology constant.

What is marginal productivity?

  1. The change in output resulting from a one-unit increase in an input.

  2. The change in output resulting from a one-unit decrease in an input.

  3. The total output produced by an input.

  4. The average output produced by an input.

Show answer
Correct Option: A
Explanation:

Marginal productivity is the change in output resulting from a one-unit increase in an input, holding all other inputs constant.

What is the law of diminishing marginal productivity?

  1. As more of an input is used, its marginal productivity eventually decreases.

  2. As more of an input is used, its marginal productivity eventually increases.

  3. As more of an input is used, its marginal productivity remains constant.

  4. As more of an input is used, its marginal productivity becomes negative.

Show answer
Correct Option: A
Explanation:

The law of diminishing marginal productivity states that as more of an input is used, its marginal productivity eventually decreases, holding all other inputs constant.

What is the relationship between the marginal productivity of an input and the average productivity of that input?

  1. The marginal productivity of an input is always greater than the average productivity of that input.

  2. The marginal productivity of an input is always less than the average productivity of that input.

  3. The marginal productivity of an input is equal to the average productivity of that input.

  4. The relationship between the marginal productivity of an input and the average productivity of that input is indeterminate.

Show answer
Correct Option:
Explanation:

The relationship between the marginal productivity of an input and the average productivity of that input is not always straightforward. However, when the average productivity is at its maximum, the marginal productivity of the input is equal to the average productivity.

What is the relationship between the marginal productivity of an input and the total productivity of that input?

  1. The marginal productivity of an input is always greater than the total productivity of that input.

  2. The marginal productivity of an input is always less than the total productivity of that input.

  3. The marginal productivity of an input is equal to the total productivity of that input.

  4. The relationship between the marginal productivity of an input and the total productivity of that input is indeterminate.

Show answer
Correct Option:
Explanation:

The marginal productivity of an input is equal to the change in total productivity resulting from a one-unit increase in that input, holding all other inputs constant.

What is the relationship between the marginal productivity of an input and the cost of that input?

  1. The marginal productivity of an input is always greater than the cost of that input.

  2. The marginal productivity of an input is always less than the cost of that input.

  3. The marginal productivity of an input is equal to the cost of that input.

  4. The relationship between the marginal productivity of an input and the cost of that input is indeterminate.

Show answer
Correct Option:
Explanation:

In order to maximize profits, the marginal productivity of an input should be equal to the cost of that input.

What is the relationship between the marginal productivity of an input and the price of the output produced by that input?

  1. The marginal productivity of an input is always greater than the price of the output produced by that input.

  2. The marginal productivity of an input is always less than the price of the output produced by that input.

  3. The marginal productivity of an input is equal to the price of the output produced by that input.

  4. The relationship between the marginal productivity of an input and the price of the output produced by that input is indeterminate.

Show answer
Correct Option:
Explanation:

In order to maximize profits, the marginal productivity of an input should be equal to the price of the output produced by that input.

What is the relationship between the marginal productivity of an input and the elasticity of demand for the output produced by that input?

  1. The marginal productivity of an input is always greater than the elasticity of demand for the output produced by that input.

  2. The marginal productivity of an input is always less than the elasticity of demand for the output produced by that input.

  3. The marginal productivity of an input is equal to the elasticity of demand for the output produced by that input.

  4. The relationship between the marginal productivity of an input and the elasticity of demand for the output produced by that input is indeterminate.

Show answer
Correct Option: D
Explanation:

The relationship between the marginal productivity of an input and the elasticity of demand for the output produced by that input is indeterminate. It depends on a number of factors, including the nature of the production function, the market structure, and the behavior of consumers.

What is the relationship between the marginal productivity of an input and the elasticity of supply of the output produced by that input?

  1. The marginal productivity of an input is always greater than the elasticity of supply of the output produced by that input.

  2. The marginal productivity of an input is always less than the elasticity of supply of the output produced by that input.

  3. The marginal productivity of an input is equal to the elasticity of supply of the output produced by that input.

  4. The relationship between the marginal productivity of an input and the elasticity of supply of the output produced by that input is indeterminate.

Show answer
Correct Option: D
Explanation:

The relationship between the marginal productivity of an input and the elasticity of supply of the output produced by that input is indeterminate. It depends on a number of factors, including the nature of the production function, the market structure, and the behavior of producers.

What is the relationship between the marginal productivity of an input and the level of technology?

  1. The marginal productivity of an input is always greater when the level of technology is higher.

  2. The marginal productivity of an input is always less when the level of technology is higher.

  3. The marginal productivity of an input is unrelated to the level of technology.

  4. The relationship between the marginal productivity of an input and the level of technology is indeterminate.

Show answer
Correct Option:
Explanation:

The marginal productivity of an input is typically greater when the level of technology is higher, because new technologies often allow for more efficient use of inputs.

What is the relationship between the marginal productivity of an input and the size of the firm?

  1. The marginal productivity of an input is always greater in larger firms.

  2. The marginal productivity of an input is always less in larger firms.

  3. The marginal productivity of an input is unrelated to the size of the firm.

  4. The relationship between the marginal productivity of an input and the size of the firm is indeterminate.

Show answer
Correct Option: D
Explanation:

The relationship between the marginal productivity of an input and the size of the firm is indeterminate. It depends on a number of factors, including the nature of the production function, the market structure, and the behavior of firms.

What is the relationship between the marginal productivity of an input and the time period?

  1. The marginal productivity of an input is always greater in the short run than in the long run.

  2. The marginal productivity of an input is always less in the short run than in the long run.

  3. The marginal productivity of an input is unrelated to the time period.

  4. The relationship between the marginal productivity of an input and the time period is indeterminate.

Show answer
Correct Option: D
Explanation:

The relationship between the marginal productivity of an input and the time period is indeterminate. It depends on a number of factors, including the nature of the production function, the market structure, and the behavior of firms.

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