Chapter MCQ Test 2 — Production Function
10 Questions • 12 min • Chapter MCQ
12:00
Question 1 of 10
A farmer keeps adding workers to a fixed field. Output rises fast at first, then slowly, then falls. This pattern is the:
Law of variable proportions
Law of demand
Law of supply
Law of equi-marginal utility
Explanation: Rising-then-falling marginal product with a fixed factor is the law of variable proportions.
Question 2 of 10
Diminishing returns set in mainly because, in the short run, the fixed factor:
Cannot be increased, so each extra worker has less of it to use
Is unlimited
Disappears
Doubles automatically
Explanation: A constant fixed factor shared among more variable units lowers each unit's extra output.
Question 3 of 10
TP values are 0, 12, 28, 40, 48, 48. The marginal product of the 5th unit is:
8
48
0
12
Explanation: MP₅ = TP₅ − TP₄ = 48 − 40 = 8.
Question 4 of 10
From the same data, total product is maximum and MP becomes zero at unit:
6
1
3
4
Explanation: TP stops rising at the 6th unit (48 to 48), where MP = 0.
Question 5 of 10
A producer is in Stage III where MP is negative. The sensible action is to:
Reduce the variable factor and move back to Stage II
Add even more workers
Stay in Stage III
Remove the fixed factor
Explanation: Since extra workers now cut output, the firm should cut back to the rational Stage II.
Question 6 of 10
Average product is rising as long as marginal product is:
Greater than average product
Less than average product
Zero
Negative
Explanation: When MP exceeds AP it pulls AP up; AP rises until MP = AP at AP's peak.
Question 7 of 10
The production function Q = f(L, K) tells us about the ____ relationship, not about money costs.
Physical (technical)
Financial
Legal
Emotional
Explanation: It links physical input quantities to physical output, ignoring prices and costs.
Question 8 of 10
A bakery can change its workers daily but can only build a bigger oven over a year. Changing only workers is a ____ decision.
Short-run
Long-run
Market-period
Timeless
Explanation: With the oven (capital) fixed and only labour variable, the firm is operating in the short run.
Question 9 of 10
In Stage I, increasing returns occur partly because the fixed factor was:
Under-utilised, so extra workers improve efficiency
Over-crowded
Removed
Negative
Explanation: Early variable units use the spare capacity of the fixed factor better, raising MP.
Question 10 of 10
Why can a firm not raise output forever simply by hiring more workers on a fixed plant?
Marginal product eventually falls and turns negative
Workers never tire
Capital is infinite
Output is unlimited
Explanation: Diminishing then negative returns mean each extra worker eventually adds less, then reduces, output.