Question 1

When labour is the variable input, in Stage 2

a) The marginal product of labour is positive and increasing

b) The marginal product of labour is negative and increasing

c) The marginal product of labour is positive and declining

d) the marginal product of labour is negative and declining

Question 2

Total product is maximized when marginal product is at a minimum.

Select one:

True

False

Question 3

When the marginal product of an input is increasing then the marginal cost curve is increasing.

Select one:

True

False

Question 4

The Average Product (AP) curve rises as long as

a) None of the above are correct.

b) the marginal product is less than AP

c) The marginal product is greater than AP.

d) The Marginal Product is equal to AP.

Question 5

An important relationship between production and cost can be represented by which of the following statements

a) When average or marginal products are increasing, average or marginal costs are decreasing

b) When average or marginal products are increasing, average or marginal costs are increasing

c)When average or marginal products are decreasing, average or marginal costs are decreasing

d) None of the above are correct

Question 6

The average fixed cost curve is irrelevant to decision making.

Select one:

True

False

Question 7

In production theory, the firm will operate in either Stage 2 or Stage 3.

Select one:

True

False