DEL CAMPO, BLESSIE ANN C.
BSBA HRM 2C
ECO-MODULE4
ASSIGNMENT
I. Complete the table below and graph.
Labor input TP MP AP
1 6
2 9
3 14
4 17
5 22
6 27
7 29
8 25
9 16.5
10 10
11 6
12 3
13 1
14 0
II. True or False
_______ 1. Productivity is the output produced by a unit of factor input during a given span of
time.
_______ 2. The theory of production describes the functional relationships of output and
economic resources, assuming these are fixed sizes.
_______ 3. Improvement in productivity can be seen if the ratio of output over input increases
since a unit of input can produce more of the same output.
_______ 4. A production function illustrates the varied combinations of inputs at the same level
of plant capacity.
_______ 5. Diseconomies of scale are the negative sloping portion of a long-run average cost
curve.
_______ 6. The Law of Diminishing Returns describes the tendency at some point for each
succeeding addition to output to become smaller as the firm add succession units of variable input
to some fixed inputs.
_______ 7. An isoquant map contains infinite combinations of resource inputs that the same
budget can purchase given constant prices.
_______ 8. The AP and MP of a production function may shift downward or upward only
because the overall productivity level of that firm may also change.
_______ 9. Computers and computerized machineries are means of improving overall efficiency
by utilizing resource-saving technology.
_______ 10. Returns to scale are the indicator of plant-size change of a given business firm.
_______ 11. MRS measures the price of labor inputs over the price of capital outputs.
_______ 12. Output yielded from the last unit of input is marginal product.
_______ 13. Maximum output is otherwise known as plant capacity.
_______ 14. The quotient from dividing TP by the umber of variable inputs is average product.
_______ 15. Diseconomies of scale are the positive sloping portion of a long-run average cost
curve.
III. Choose the letter of the correct answer.
_____ 1. Total product continues to increase despite a decrease in the marginal product when
_____.
a. The marginal produce is already negative
b. The average product continues to increase
c. The resource mix changes
d. The marginal product is still positive
_____ 2. The Law of diminishing Returns is due to _____.
a. Increasing resources
b. Resource limitations
c. Changing resource efficiency
d. Changing resource mix
_____ 3. Increasing one factor input without changing the other results in _____.
a. Returns to scale
b. Diminishing returns
c. Hierarchy of isoquants
d. Hierarchy of isocosts
_____ 4. The change in the marginal rate of substitution along the isoquant is due to _____.
a. Decreasing efficiency of additional resources
b. Increasing efficiency of less resources
c. Increasing efficiency of additional resources
d. Changing efficiency of a resource relative to another
_____ 5. A hierarchy of isoquants implies _____.
a. Changing level of output
b. Changing level of resource inputs
c. Diminishing returns
d. Returns to scale
_____ 6. A hierarchy of isocosts implies _____.
a. Changing budget
b. Changing purchasing power
c. Changing input prices
d. All of the above
_____ 7. The least-cost combination is the _____.
a. Lowest budget point along the isoquant
b. Lowest budget point below the isoquant
c. Lowest budget point along the isocost
d. None of the above
_____ 8. Cheaper labor inputs than capital inputs results in more use of the former as a least-cost.
a. More labor substituted for capital
b. Less capital used
c. Less budget for labor input in place of capital
d. More labor inputs purchased
_____ 9. If one unit of labor can buy five units of capital, how many units of labor can one unit of capital
buy?
a. 0.20
b. 0.50
c. 0.40
d. 0.60
_____ 10. When returns to scale are negative, average productivity _____
a. Increases
b. Decreases
c. Does not change
d. Varies
_____ 11. When returns to scale are decreasing, a unit of output requires _____ units of inputs.
a. More
b. Less
c. The same
d. Varied
_____ 12. Which of the following causes returns to scale to increase?
a. Control
b. Communications
c. Specialization
d. Technology
_____ 13. Which of the following indefinitely postpones negative rate of returns?
a. Technological innovations
b. Technological advancement
c. Technology
d. Continuous technological improvement
_____ 14. The use of more resources shifts the production function curve _____.
a. Diagonally and upward
b. Diagonally and downward
c. Diagonally and rightward
d. Rightward
_____ 15. When returns to scale are decreasing, total output _____
a. Increases
b. Decreases
c. Does not change
d. Varies
IV. Match The term (column B) that best fits the phrases (Column A below.
Column A Column B
_____ 1. Describe the functional relationship of input a. Marginal product
and output
_____ 2. Production function b. Least-cost combination
_____ 3. Infinitesimal change c. Isocost line
_____ 4. Output yielded from the last unit of input d. isquant
_____ 5. TP divided by the number of variable inputs e. Production function
_____ 6. Refers to the declining trend to MP f. Counterproductive
conditions
_____ 7. Illustrates the varied combinations of inputs at g. Finite change
the same level of plant capacity
_____ 8. Contains combinations of inputs that the same h. Marginal rate of substitution
budget can purchase given constant prices
_____ 9. Price of labor inputs over price of capital i. Economies of scale
inputs
_____ 10. Ration between output and input j. Diseconomies of scale
_____ 11. Change in capital inputs over change in labor k. Maximum output
inputs
_____ 12. Combination of resources that yields output l. Improved production
at the lowest possible cost
_____ 13.”same quantity” m. Isoquant map
_____ 14. Any downward sloping portion of a long-run n. Average product
average cost curve
_____ 15. Any upward sloping portion on the same o. Returns to scale
average cost curve in #14
_____ 16. Illustrated by the TP, MP, and AP curves p. Law of diminishing returns
shifting upward
_____ 17. % change in plant capacity over % change in q. Resource inputs
resource input
_____ 18. An eventual result of expansion of plant size r. An infinitely small change
_____ 19. Units of increase in TP s. Theory of production
_____ 20. Measures the change between output and t. Productivity
input as their levels vary in the hierarchy production
functions
u. utilization
v. production isoquant