Exam #1 (pt. 2)

Question 1

The relationship between average and marginal physical product means:
A. average chases marginal
B. if marginal is above average, average is decreasing
C. when marginal = average, average is decreasing
D. marginal chases the average

Answer 1

A.

Question 1

At the point where APP = MPP:
A. is the border between Stage II and Stage III of production
B. APP is decreasing
C. MPP is decreasing
D. MPP is constant

Answer 1

C.

Question 2

Technological change in agricultural production:
A. shifts the production function upwards
B. provides less output for the same amount of input
C. does not affect the production function
D. decreases the net output of the production process

Answer 2

A.

Question 3

The Law of Diminishing Marginal Returns states that:
A. scarcity forces us to choose
B. if more input is used in a firm, holding all other inputs constant, the additional product will eventually decline
C. when diminishing marginal returns set in, output declines
D. as more input is applied to a productive enterprise, output decreases

Answer 3

B.

Question 4

A student who has studied all night to the point of falling asleep during an exam is in what state of production?
A. one
B. two
C. three
D. four

Answer 4

C.

Question 5

Which of the following changes will change a firm’s production function?
A. changes in the cost of production
B. changes in technology
C. changes in the prices of resources available
D. changes in product prices

Answer 5

B.

Question 6

What are the units for TPP?
A. oz.
B. bu.
C. bu./oz.
D. oz./bu.

Answer 6

b.

Question 7

What are the units for MPP?
A. bu.
B. oz.
C. oz./bu.
D. bu./oz.

Answer 7

D.

Question 8

What are the units for APP?
A. bu.
B. oz.
C. oz./bu.
D. bu./oz.

Answer 8

D.

Question 9

The production function for the wheat farm represents:
A. the economic price relationship between inputs and outputs
B. the physical relationship between inputs and outputs
C. the quantity of chemical produced
D. the supply of wheat

Answer 9

B.

Question 10

The assumption of “ceteris paribus” refers to:
A. modus operandi
B. habeas corpus
C. scarcity
D. holding all else constant

Answer 10

D.

Question 11

An economist thinks that a county yield contest that rewards high level of output is:
A. a good idea, since it provides the correct incentives to growers
B. not worth the trouble, due to chemicals and fertilizer “burn”
C. a poor goal, relative to an economic goal
D. a scare commodity, where benefits outweigh costs

Answer 11

C.

Question 12

The real world is enormously complicated. Therefore:
A. we use production theory, which is complex
B. we must simplify the real world in order to understand it
C. we use the physical relationship between inputs and outputs
D. we use the SR instead of the LR

Answer 12

B.

Question 13

A typical production function:
A. increases at an increasing rate, then increases at a decreasing rate
B. increases at an increasing rate, then decreases at a decreasing rate
C. decreases at an increasing rate, then increases at a decreasing rate
D. decreases at an increasing rate, then decreases at a decreasing rate

Answer 13

A.

Question 14

Marginal Physical Product:
A. is equal to the rate of change in APP
B. is the rate of change in TPP
C. is equal to APP for an increasing returns production function
D. all of the other answers

Answer 14

B.

Question 15

If MPP > APP :
A. MPP is increasing
B. MPP is decreasing
C. APP is increasing
D. APP is decreasing

Answer 15

C.

Question 16

APP represents:
A. overal productivity
B. how productive all of the units of input are
C. how productive the last unit of input is
D. scarcity

Answer 16

C.

Question 17

If average productivity is increasing:
A. APP = MPP
B. APP > MPP
C. APP < MPP
D. not enough information to answer

Answer 17

C.

Question 18

If average productivity is increasing:
A. MPP is negative and declining
B. MPP is increasing
C. MPP is decreasing
D. not enough to answer

Answer 18

D.

Question 19

Diminishing returns begin to occur where:
A. TPP increases at an increasing rate
B. TPP increases at a decreasing rate
C. TPP decreases at an increasing rate
D. TPP decreases at a decreasing rate

Answer 19

B.

Question 20

In the equation: Y = f( A/ K, L, M):
A. land is fixed
B. land is variable
C. output is fixed
D. capital is variable

Answer 20

B.

Question 21

The Law of Diminishing Marginal Returns implies that:
A. US agriculture is in Stage III
B. marginal productivity will eventually decline
C. biotechnology will not continue to increase yields
D. if we add more fertilizer to a wheat field, output will decrease

Answer 21

B.

Question 22

Stage II occurs where:
A. MPP > APP and MPP >0
B. MPP < APP and MPP >0
C. MPP < APP and APP >0
D. MPP < APP and MPP <0

Answer 22

B.

Question 23

The Law of Diminishing Returns implies that:
A. MPP is declining
B. productivity will eventually decrease
C. goods are not scarce
D. TPP will eventually become negative

Answer 23

B.

Question 24

In the following production function: Y = f(L/ K, A, M):
A. ceteris paribus does not hold
B. labor is held constant
C. land is allowed to vary
D. labor is allowed to vary

Answer 24

D.

Question 25

In the following production function (K, L, A, M): The A stands for :
A. Acres
B. Assets
C. Land
D. Labor

Answer 25

C.

Question 26

APP is defined as:
A. MPP/X
B. MPP/Y
C. TPP/X
D. TPP/Y

Answer 26

C.

Question 27

Rational producers always operate in:
A. Stage I
B. Stage II
C. Stage III
D. it depends on the situation

Answer 27

B.

Question 28

MPP is defined as: (*=delta)
A. change in output given a change in input
B. * TPP/ *X
C. * Y/ * X
D, all of the above answers

Answer 28

D.

Question 29

Stage III:
A. uses too little input
B. uses resources efficiently
C. production too much output
D, uses too much input

Answer 29

D.

Question 30

Stage I:
A. uses too little input
B. uses resources efficiently
C. producers too much output
D. uses too much input

Answer 30

A.

Question 31

In the real world, the Law of Diminishing Marginal Productivity:
A, does not hold due to economic growth
B. holds, but only in some locations
C. does not hold for agriculture, which continues to feed the world
D. holds, but can be overcome with technological change

Answer 31

D.