Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!
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1. The production function:
a. shows the level of utility at each level of consumption.
b. shows the quantity produced at each price.
c. shows the maximum output that can be produced with a given quantity of inputs.
d. shows the different possible bundles of two goods that can be produced when resources are fully employed.
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2. The total amount of output produced is called:
a. total supply.
b. total product.
c. both a and b.
d. none of the above.
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3. The _______ of a factor of production is the extra output produced by adding an additional unit of that input to the production process while holding other inputs to production constant.
a. total product
b. marginal product
c. average product
d. total revenue.
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4. Q denotes the amount produced. L denotes the number of units of labor used. So, Q/L =
a. TP
b. AP
c. MP
d total profit.
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5. We get fewer and fewer additional units as we add more and more units of the inputs to production process. We call this fact the:
a. law of diminishing marginal utility.
b. law of diminishing returns.
c. law of supply.
d. law of demand.
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6. _______ arise when an increase in all inputs leads to a more-than-proportional increase in the level of output. ______ means that as inputs are added to the production process, output increases proportionally.
a. economies of scale; constant returns to scale
b. constant returns to scale; decreasing returns to scale
c. decreasing returns to scale; economies of scale
d. economies of scale; decreasing returns to scale.
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7. In the _______ run, firms can only adjust the variable factors of production. In the _______ run, firms are able to change all of the factors of production including capital.
a. long; short
b. medium; short
c. short; long
d. none of the above.
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8. _______ refers to improvements in the processes for producing goods and services, changes in old products, or introduction of new products.
a. globalization
b. technological change
c. both a and b
d. neither a nor b
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9. The ratio of total output to a weighted average of inputs is called:
a. total product.
b. marginal product.
c. average product.
d. productivity.
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10. The local grocery store owned by Mr. DeCarlos is called a:
a. partnership.
b. individual proprietorship.
c. corporation.
d. limited liability corporation.
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11. Which of the following is the major disadvantage of a corporation?
a. Corporations are hard to manage because there are often many stock holders.
b. Corporations fail more often than individual proprietorships.
c. Corporations are charged an extra tax on their profits.
d. Corporations require a lot of money to get started.
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12. Which of the following is considered a fixed input to production in the short-run?
a. labor
b. capital
c. money
d. stock.
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13. Using three units of labor, the firm can produce 1500 units of the good. Using four units of labor, the firm can produce 2000 units of the good. The MARGINAL product of the fourth unit of labor is:
a. 100
b. 1500
c. 2000
d. 500
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14. Using three units of labor, the firm can produce 1500 units of the good. Using four units of labor, the firm can produce 2000 units of the good. The AVERAGE product of the fourth unit of labor is:
a. 100
b. 1500
c. 2000
d. 500
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15. What do we call the linking of different people through a particular medium?
a. network
b. channel
c. station
d. commune
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