Exhibit 7-1 Production of pizza data
Workers
Pizzas
0
0
1
4
2
10
3
15
4
18
5
19
Exhibit 7-1 shows the change in the short-run production of pizzas as more workers are hired. The table shows the marginal product of the labor input is decreasing with the hiring of the third worker. A possible reason for this diminishing marginal product is:
A. decreases in labor productivity.
B. increases in plant size.
C. decreases in fixed cost.
D. increased division of labor as additional workers are hired.
Answer: A
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The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 60 units per day?
A) plant A B) plant B C) plant C D) plant D
If Q = K2L2 the MPL is
a. constant b. diminishing c. increasing
When an economy is operating with maximum efficiency, the production of more of commodity A will entail the production of less of commodity B because
A. resources are specialized and cannot be easily reallocated. B. resources are limited. C. the structure of demand is fixed at any point in time. D. material wants are insatiable.
Small Business
What will be an ideal response?