The Theory of Production
Economics · 50 practice questions
Meaning and types of production; TP, AP, MP and the law of variable proportion; division of labour and specialization; internal/external economies of scale; production functions and returns to scale; producers' equilibrium (isoquant-isocost and marginal analyses); factors affecting productivity.
- Relate TP, AP and MP to the law of variable proportion.
- Compare internal and external economies of scale.
- Identify types of production functions and returns to scale.
- Determine a firm's equilibrium position using isoquant-isocost analysis.
- Identify factors affecting productivity.
Try a few questions
- Practice question 1
From the same TP schedule, the extra output contributed by the 4th worker (its marginal product) is
- A.8
- B.10
- C.4
- D.0
Show the answer
C. 4
MP4 = TP4 − TP3 = 28 − 24 = 4.
- Practice question 2
The long run in production theory is defined as a period during which
- A.all factors of production can be varied
- B.no factors of production can be varied
- C.only labour can ever be varied
- D.only land can ever be varied
Show the answer
A. all factors of production can be varied
In the long run, a firm can adjust every input, including fixed factors.
- Practice question 3
Using the same TP schedule, the marginal product of the 5th worker is
- A.6
- B.8
- C.0
- D.2
Show the answer
D. 2
MP5 = TP5 − TP4 = 38 − 36 = 2.
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