Multiple Choice Questions:
1. The long run
a. Is a period in which a firm can adjust all its inputs.
b. Can vary in length from industry to industry.
c. Is a period in which all costs are variable costs.
d. Is characterized by all of the above.
2. The long-run production period
a. Is a time when all inputs are variable.
b. Varies in length according to how capital goods are specialized.
c. Is likely to be longer for a steel manufacturer than for a retailer who sells watches off a cart at the local mall.
d. Is characterized by all of the above.
3. Which of the following most accurately describes the long-run period?
a. The long run is a period of time in which a firm is unable to vary some of its factors of production.
b. In the long run, a firm is able to expand output by utilizing additional workers and raw materials, but not physical capital.
c. The long run is of sufficient length to allow a firm to alter its plant capacity and all other factors of production.
d. The long run is of sufficient length to allow a firm to transform economic losses into economic profits.
e. Both a and b most accurately describe the long-run period.
4. Production in the short run
a. Is subject to the law of diminishing marginal product.
b. Involves some fixed factors.
c. Can be increased by employing another unit of a variable input, as long as the marginal product of that input is positive.
d. Is characterized by all of the above.
e. Is characterized by none of the above.
5. A production function shows the relationship between
a. Variable inputs and fixed inputs.
b. Variable inputs and output.
c. Costs and output.
d. Inputs and costs.
e. Production and sales revenue.
6. Diminishing marginal product
a. Occurs in the long run but not in the short run.
b. Occurs in the short run but not in the long run.
c. Occurs both in the long run and the short run.
d. Occurs in neither the long run nor the short run.
7. Diminishing marginal productivity in a frozen-pizza company means that
a. Hiring additional workers causes the total output of pizza to fall.
b. Hiring additional workers does not change the total output of pizza produced.
c. Hiring additional workers adds fewer and fewer pizzas to total output.
d. The average total cost of production must be decreasing.
8. If the marginal product of a firm’s only variable input is negative,
a. Its total product is growing at a decreasing rate.
b. It will use more of the variable input until its marginal product is again positive.
c. It will reduce its use of the variable input.
d. Its total product is minimized.
e. None of the above would be true.