29. For a producer, the relationship between the quantity of inputs used and qua

Question

29. For a producer, the relationship between the quantity of inputs used and quantity of output to be produced is called the production function. produce diminishing marginal product? a. The farmer is able to produce 6,600 bushels of wheat when he hires 4 workers. b. The farmer is able to produce 6,800 bushels of wheat when he hires 4 workers c. The farmer is able to produce 7,000 bushels of wheat when he hires 4 workers. d. The farmer is able to produce 7,400 bushels of wheat when he hires 4 workers. Suppose that on a 100-acre farm, its owner is able to produce 2,000 bushels of wheat when he hires 2 workers. He is able to 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of . The total cost curve gets steeper as output 30. By definition the total cost of production is the sum of fixed and variable costs increases due to diminishing marginal product, and it suggests that a. adding additional workers will lower total cost b. marginal cost is upward sloping. d. additional units of output become less costly as more output is produced c. the firm is at full capacity 31. Base on the derivation of marginal costs, why does the marginal cost exhibit a U-shape? a. diminishing marginal product. c. the fact that increasing marginal product follows decreasing marginal product derived from an S-shape production function. d. the fact that decreasing marginal product follows increasing marginal product derived from an S-shape production function. b. increasing marginal product. 4 RMUNNICHA

Explanation / Answer

29) a is correct.

According to diminishing marginal product, increase in output falls with increase in input. When we increase workers from 2 to 3 output increases by 2400. So now if we increase workers to 4 output must increase by less than 2400. When output is 6600, increase in output is 2000, which does not violate diminishing marginal productivity theorem.

30) c is correct

When total cost becomes steeper it implies that cost of hiring additional input increases, which further implies that marginal cost of upward sloping.

31) c is correct

First marginal cost falls due to increasing returns and later it rises due to diminishing returns. Hence is U shaped.

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