ECO165CH005 - Chapter 5 Supply Decisions CAPACITY...

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Chapter 5 Supply Decisions CAPACITY CONSTRAINTS: THE PRODUCTION FUNCTION 1. The factors of production include: A) Money. B) Profit. C) Land, labor, capital, and entrepreneurship. D) All of the above. Ans: C Page: 110 Type: Definition 2. Land, labor, capital and entrepreneurship are called: A) Factors of production. B) Factors of demand. C) Fixed costs. D) Variable costs. Ans: A Page: 110 Type: Definition 3. Which of the following are factors of production for a typical college? A) Sporting event tickets. B) Tuition. C) Parking fees. D) Library. Ans: D Page: 110 Type: Definition 4. The maximum output that can be produced from a set of inputs is measured by: A) The production function. B) The demand schedule. C) Fixed costs. D) Marginal costs. Ans: A Page: 110 Type: Basic 5. A production function: A) Shows the cost of producing any level of output. B) Is a technological relationship between factors of production and output. C) Is a technological relationship that expresses the least-cost method of purchasing inputs. D) Shows the minimum amount of output that can be obtained from a given set of inputs. Ans: B Page: 110 Type: Basic Schiller: Essentials of Economics, 6/e Page 135
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6. A production function is significant because it reveals the: A) Minimum output that can be obtained from alternative combinations of inputs. B) Maximum inputs required to produce a given quantity of output. C) Maximum output that can be obtained from alternative combinations of inputs. D) Maximum profit that a firm can earn. Ans: C Page: 110 Type: Basic 7. The limits to the production of any good are reflected in the: A) Law of demand. B) Capacity curve. C) Demand curve. D) Production function. Ans: D Page: 110 Type: Basic 8. When a firm produces a level of output on the production function: A) Marginal physical product is zero. B) Maximum efficiency is achieved. C) Opportunity cost for resources is at a maximum. D) Profits are maximized. Ans: B Page: 111 Type: Basic 9. Which of the following statements is true? A) Only if maximum efficiency is achieved will we produce on the production function. B) Even if the production process is inefficient we will produce on the production function. C) The best possible use of resources does not mean we will produce on the production function. D) It is impossible to produce on the production function because resources are always used somewhat inefficiently. Ans: A Page: 111 Type: Basic 10. Which of the following places a limit on potential output? A) Consumer demand. C) The government. B) Land and capital constraints. D) All of the above. Ans: B Page: 112 Type: Basic 11. The change in total output that results from one additional unit of input is the: A) Opportunity cost of the output. C) Marginal physical product of the input. B)
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ECO165CH005 - Chapter 5 Supply Decisions CAPACITY...

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