Practice Questions
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What does the marginal product of labor measure in an economic context?
The marginal product of labor shows how much extra stuff we make when we hire one more worker. Other options are incorrect because This option confuse...
In the context of Marginal Product Analysis, how does the Law of Diminishing Returns affect economic efficiency when increasing the quantity of labor while keeping other inputs constant?
The Law of Diminishing Returns means that adding more workers will eventually lead to smaller increases in output. Other options are incorrect because...
If a firm increases its input of labor and observes an increase in marginal revenue, what does this indicate about the firm's production decisions?
When a firm hires more workers and earns more money from each extra unit they produce, it means they are using their resources well. Other options are...
In the context of Marginal Product Analysis, how does the Law of Diminishing Returns affect a firm's decision on resource allocation when aiming for profit maximization?
The Law of Diminishing Returns means that after a certain point, adding more resources gives smaller increases in output. Other options are incorrect ...
In a perfectly competitive market, how does the marginal product of labor influence a firm's production decisions when considering input-output relationships?
When the marginal product of labor is high, it means each worker adds a lot to production. Other options are incorrect because Some might think that a...
What does the marginal product of labor measure in an economic context?
The marginal product of labor shows how much extra stuff we make when we hire one more worker. Other options are incorrect because This option confuse...
In marginal product analysis, if the total product of an input increases as more units of that input are used, what does this indicate about the marginal product of that input?
When you add more of an input and the total product goes up, it means each extra unit is helping more. Other options are incorrect because Some might ...
What does the Law of Diminishing Returns state regarding the addition of input in production?
The Law of Diminishing Returns says that as you add more of one input, like workers, to a fixed amount of another input, like machines, the extra outp...
A bakery is considering hiring an additional baker. The marginal product of this baker is expected to be 20 loaves of bread per day, while the wage offered is $100 per day. Which category best describes the bakery's decision-making situation regarding hiring this additional baker?
The bakery will gain 20 loaves of bread each day from the new baker. Other options are incorrect because This suggests that the bakery gets no extra b...
If the marginal product of labor is greater than the wage paid to labor, it means that hiring more labor will always increase the firm's overall profit.
This statement is false. Other options are incorrect because Some might think high productivity always means more profit; This suggests there are alwa...
Arrange the following steps in the correct order for conducting a Marginal Product Analysis: A) Compare the marginal product of labor to its wage, B) Determine the additional output from hiring one more unit of labor, C) Make a decision on hiring based on cost efficiency, D) Calculate the marginal product of labor.
First, you find out how much extra output you get from hiring one more worker. Other options are incorrect because This option starts with comparing o...
How should a firm determine whether to hire an additional worker based on marginal product analysis?
A firm should hire more workers if the extra output they create is greater than the cost of their wages. Other options are incorrect because Just incr...
In Marginal Product Analysis, the additional output generated by employing one more unit of labor is referred to as the __________. This concept is critical for assessing the efficiency of labor relative to its cost, such as wages.
The Marginal Product is the extra output you get when you add one more worker. Other options are incorrect because Total Product is the overall output...
A local bakery is considering hiring an additional baker to increase production. Currently, the marginal product of labor is 20 loaves of bread per day, and the wage for the new baker is $100 per day. If the marginal cost of producing each loaf of bread is $5, what should the bakery do regarding the hiring decision?
The bakery should hire the baker. Other options are incorrect because Some might think the wage is too high; This option suggests waiting for a price ...
Marginal Product of Labor : Wage :: Marginal Product of Capital : ?
The marginal product of capital shows how much extra output we get from using one more unit of capital. Other options are incorrect because Total reve...
A company is considering hiring one more worker. If the marginal product of labor is greater than the wage paid to that worker, what should the company do?
If the extra worker can produce more value than what they cost, the company will make more money. Other options are incorrect because Thinking that sa...
A business decides to hire an additional worker and observes a rise in total output. What is the most likely reason for this increase in production?
When a business hires another worker, the extra output they create is greater than the cost of their wages. Other options are incorrect because It's a...
Which of the following statements about Marginal Product Analysis are true? (Select all that apply)
Other options are incorrect because Many think that more workers always mean more output; Some believe comparing worker output to their pay is always ...
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