What does the production function represent in economics?
A) The relationship between total input and total output
B) The cost of production
C) The amount of labor in production
D) The demand curve of a good
In the short run, which factor is considered fixed in the production function?
A) Labor
B) Capital
C) Raw materials
D) Technology
What does the law of diminishing returns state?
A) Output increases at a constant rate as inputs increase
B) Marginal output decreases as more units of a variable input are added
C) Total output increases indefinitely with the increase in inputs
D) Total cost decreases as output increases
Which of the following describes the stage of increasing returns in the law of returns?
A) Marginal product is increasing as more inputs are added
B) Marginal product is constant
C) Total output decreases
D) Marginal product becomes negative
When does the law of diminishing returns set in?
A) After the first unit of input
B) When all inputs are variable
C) After a certain point of increasing input usage
D) Before production begins
The production function is often represented by which of the following?
A) P = Q + I
B) Y = f(L, K)
C) C = a + bY
D) S = C + I
In the law of returns to scale, when all inputs are doubled and output more than doubles, it is called:
A) Constant returns to scale
B) Increasing returns to scale
C) Diminishing returns to scale
D) Negative returns to scale
In the long run, all factors of production are:
A) Fixed
B) Variable
C) Subject to diminishing returns
D) Inefficient
When a firm experiences decreasing marginal returns, it means:
A) Marginal product is increasing
B) Total product is decreasing
C) Marginal product is falling
D) Average product is constant
What is the total product (TP) in the production function?
A) The total output produced by a given combination of inputs
B) The total cost of producing a good
C) The amount of raw materials used
D) The total labor cost
Which of the following occurs when the production function exhibits diminishing marginal returns?
A) Each additional unit of input contributes less to output
B) Output increases at a constant rate
C) Output increases at an increasing rate
D) All inputs become fixed
The law of returns to scale applies in the:
A) Short run
B) Long run
C) Both short and long run
D) Only when inputs are fixed
What is the marginal product (MP) in the context of the production function?
A) The total cost of production
B) The additional output produced by an additional unit of input
C) The fixed cost of production
D) The cost of labor used in production
When does the law of diminishing marginal returns NOT apply?
A) In the short run
B) In the long run
C) When all inputs are variable
D) In a perfectly competitive market
What happens in the stage of negative returns in the law of returns?
A) Output continues to increase at an increasing rate
B) Marginal product becomes negative
C) Average product remains constant
D) The firm is operating at optimal efficiency
Which of the following is NOT true about the production function?
A) It shows the relationship between inputs and outputs
B) It is used to determine efficiency in production
C) It can be represented mathematically
D) It only applies to short-run production
What does the term “returns to scale” refer to?
A) Changes in output when all inputs are changed proportionally
B) The effect of increasing one input while keeping others constant
C) The impact of labor on total output
D) The increasing cost of production as output increases
What is the relationship between marginal product (MP) and average product (AP) when the marginal product is greater than the average product?
A) Average product increases
B) Average product decreases
C) Average product remains constant
D) Total product decreases
The law of diminishing returns applies when:
A) The amount of capital increases
B) Only one input is increased while others are fixed
C) All inputs are increased proportionally
D) The firm reaches optimal efficiency
In the production function, what does the “f” represent in Y = f(L, K)?
A) Fixed costs
B) The relationship between labor and capital
C) The total output produced
D) The marginal product of labor
In the short run, the firm experiences:
A) Constant returns to scale
B) Only fixed costs
C) Both fixed and variable factors of production
D) Increasing returns to scale
The production function shows that as more units of a variable input are added to a fixed input, total output initially increases at an increasing rate. This reflects:
A) The stage of decreasing returns
B) The stage of increasing returns
C) The law of diminishing returns
D) The law of constant returns
What happens when the firm operates at the point of diminishing marginal returns?
A) The marginal product of labor begins to rise
B) The firm experiences more efficient production
C) The additional output from each unit of labor decreases
D) Marginal cost falls
Which of the following would NOT be considered a factor of production in the production function?
A) Capital
B) Labor
C) Total cost
D) Land
When a firm is in the stage of increasing returns, what happens to the marginal product?
A) It decreases
B) It remains constant
C) It increases
D) It becomes negative
The law of diminishing returns is most applicable in which scenario?
A) When all factors of production are increased proportionally
B) When one input is increased while others are fixed
C) When the firm is experiencing economies of scale
D) When there is no variation in inputs
Which of the following best describes the production function?
A) The relationship between output and the cost of inputs
B) The relationship between the quantity of input and the quantity of output
C) The relationship between supply and demand in the market
D) The relationship between fixed and variable costs
