12 Questions
What does the production function describe?
The technology a firm uses to produce goods and services
How is the labor input defined in the production function?
As the product of the number of workers hired and the average hours worked per person
What is the marginal product of labor (MPE) defined as?
The change in output resulting from hiring an additional worker, holding other inputs constant
What does the marginal product curve represent?
Output produced by each additional worker
Why might the marginal product of labor be rising according to the text?
Initial gains from assigning workers to specific tasks
What relationship does the total product curve describe?
Relationship between output and labor hired, holding capital constant
What does the Law of Diminishing Returns state?
Successive units of input decrease output beyond a certain point.
How is the average product of labor defined?
Output produced by the typical worker.
What does a perfectly competitive firm maximize profits by doing?
Hiring the 'right' amount of labor and capital.
What is the short run defined as in a firm's context?
A timeframe where capital stock is fixed at a certain level.
How does a profit-maximizing firm determine the number of workers to hire?
By hiring workers until the wage rate equals the value of average product of labor.
What does it mean when the value of marginal product of labor equals the wage rate?
The firm should immediately stop hiring more workers.
Test your knowledge with 50 multiple choice questions related to the production function and labor input in economics. Questions cover topics such as technology, firm's output, labor input assumptions, and production functions.
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