AP_Krugman_Textbook

Tackle the Test: Multiple-Choice Questions

1. A production function shows the relationship between
   inputs and
   a. fixed costs.
   b. variable costs.
   c. total revenue.
   d. output.
   e. profit.


2. Which of the following defines the short run?
   a. less than a year
   b. when all inputs are fixed
   c. when no inputs are variable
   d. when only one input is variable
   e. when at least one input is fixed


3. The slope of the total product curve is also known as
   a. marginal product.
   b. marginal cost.
   c. average product.
   d. average revenue.
   e. profit.
   4. Diminishing returns to an input ensures that as a firm
   continues to produce, the total product curve will have
   what kind of slope?
   a. negative decreasing
   b. positive decreasing
   c. negative increasing
   d. positive increasing
   e. positive constant
   5. Historically, the limits imposed by diminishing returns have
   been alleviated by
   a. investment in capital.
   b. increases in the population.
   c. discovery of more land.
   d. Thomas Malthus.
   e. economic models.

module 54 The Production Function 547

Section

(^10)
(^) Behind
(^) the
(^) Supply
(^) Curve:
(^) Profit,
(^) Production,
(^) and
(^) Costs
Quantity of electricity (kilowatts)
0
1
2
3
4
Quantity of ice (pounds)
0
1,000
1,800
2,400
2,800
Tackle the Test: Free-Response Questions

1. Draw a correctly labeled graph of a production function that
   exhibits diminishing returns to labor. Assume labor is the
   variable input and capital is the fixed input. Explain how your
   graph illustrates diminishing returns to labor.

Answer (4 points)

Quantity
of output

Quantity

of labor

TP

1 point:Graph with vertical axis labeled “Quantity of output” or “Q” and

horizontal axis labeled “Quantity of labor” or “L”

1 point:Upward sloping curve labeled “Total product” or “TP”

1 point:The slope of the total product curve is positive and decreasing

1 point:Explanation that a positive and decreasing slope illustrates

diminishing returns to labor because each additional unit of labor increases

total product by less than the previous unit of labor

2. Use the data in the table below to graph the production
   function and the marginal product of labor. Do the data
   illustrate diminishing returns to labor? Explain.
   Quantity of labor Quantity of output
   LQ
   00
   119
   236
   351
   464
   575
   684
   791
   896