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Questions and Answers
What does the production function depend largely on?
What does the production function depend largely on?
- Labor and Raw Materials
- Water Well and Area of the Farm
- Labor and Capital (correct)
- Capital and Equipment
What does the total product curve show in the short run?
What does the total product curve show in the short run?
- The maximum output produced using a certain set of fixed inputs
- The average product of labor
- The relationship between output and the quantity of capital used
- The relationship between output and the quantity of labor employed (correct)
What is the relationship between output and the inputs in the production function?
What is the relationship between output and the inputs in the production function?
- Negative relationship
- Positive relationship (correct)
- No relationship
- Inverse relationship
What are the three concepts used to describe the relationship between output and the quantity of labor employed?
What are the three concepts used to describe the relationship between output and the quantity of labor employed?
What is the assumption made in the production function?
What is the assumption made in the production function?
What is the nature of the second partial derivatives of output with respect to each of the inputs?
What is the nature of the second partial derivatives of output with respect to each of the inputs?
What is the type of production function that depends on the time-frame in which the firm is operating?
What is the type of production function that depends on the time-frame in which the firm is operating?
What is the name of the concept that measures the total output in a given period?
What is the name of the concept that measures the total output in a given period?
What is the primary concern of a manager in a profit-maximizing firm?
What is the primary concern of a manager in a profit-maximizing firm?
What is the production function?
What is the production function?
What are the two intermediate targets for a manager seeking to maximize profits?
What are the two intermediate targets for a manager seeking to maximize profits?
What is assumed in the production function?
What is assumed in the production function?
What determines the level of output a firm should produce?
What determines the level of output a firm should produce?
What is typically considered in a production function?
What is typically considered in a production function?
What is the relationship between inputs and output in a production function?
What is the relationship between inputs and output in a production function?
What is the ultimate goal of a manager in choosing the optimal size of the firm?
What is the ultimate goal of a manager in choosing the optimal size of the firm?
What is the term for the technical relationships that show the maximum attainable production levels using different combinations of input at a given state of technology within a given period of time?
What is the term for the technical relationships that show the maximum attainable production levels using different combinations of input at a given state of technology within a given period of time?
What is the result of increasing the quantity of a variable input, while holding all other inputs constant, leading to a decrease in the additional output?
What is the result of increasing the quantity of a variable input, while holding all other inputs constant, leading to a decrease in the additional output?
What is the term for the total amount of output that a firm produces within a given period, utilizing given inputs?
What is the term for the total amount of output that a firm produces within a given period, utilizing given inputs?
If a firm's total product increases from 100 units to 120 units when an additional unit of labor is added, what is the marginal product of the additional unit of labor?
If a firm's total product increases from 100 units to 120 units when an additional unit of labor is added, what is the marginal product of the additional unit of labor?
What is the term for the output per unit of input of variable factors?
What is the term for the output per unit of input of variable factors?
What happens to the marginal product when additional units of a variable input are combined with a fixed input?
What happens to the marginal product when additional units of a variable input are combined with a fixed input?
If a firm's production function exhibits constant returns to scale, what will happen to the output if all inputs are doubled?
If a firm's production function exhibits constant returns to scale, what will happen to the output if all inputs are doubled?
What is the term for the increase in total output resulting from an increase in all inputs?
What is the term for the increase in total output resulting from an increase in all inputs?
Study Notes
Production Function
- The production function expresses the relationship between the quantity of productive factor used and the amount of product obtained.
- The first partial derivatives of output with respect to each of the inputs are positive, indicating a positive relationship between output and inputs (X and Y).
- The second partial derivatives of output with respect to each of the inputs are negative, indicating that the production function has a maximum point.
Concepts of Production
- Total Product: the total output in a given period.
- Marginal Product: the increase in total product due to the addition of one more unit of variable factor.
- Average Product: output per unit of input of variable factors.
Short Run and Long Run
- In the short run, the production function depends largely on labor and capital.
- To increase output in the short run, a firm must increase the amount of labor employed.
- The total product curve shows how total product changes with the quantity of labor employed.
- In the long run, the firm can choose the optimal size of the production capacity that minimizes the cost.
Key Assumptions
- The production function assumes a fixed state of technology, efficient use of input combinations, and a given time period.
- The production function can be represented as Q = F(X, Y), where Q is the output, and X and Y are the inputs (labor and capital).
Revenue and Profit
- Total Revenue is the full amount of total sales of goods and services.
- Marginal Revenue is the increase in revenue that results from the sale of one additional unit of output.
- Profit is the difference between Total Revenue and Total Cost.
Quiz Questions
- What equation expresses the relationship between the quantity of productive factor used and the amount of product obtained?
- What are the two factors of production?
- What is the theoretical objective of a firm?
- What is an increase in revenue that results from the sale of one additional unit of output?
- What is the marginal revenue?
- What is the technical relationship that shows the maximum attainable production levels using different combinations of input?
- What is the relationship between one variable factor and output?
- What is the time period over which the firm can change the quantities of all the inputs?
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Description
This quiz covers the production function, its relationship with inputs, and the characteristics of the function. Test your understanding of the first and second partial derivatives of output with respect to inputs.
