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AP Intermediate 1st Year Production and Costs — practice questions

Explore 50 free Production and Costs questions in AP Intermediate 1st Year Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Production and Costs questions and exercises with answers

Showing questions 1–30 of 50.

What does a production function give for given inputs?Read the answer and worked solution →A production function is defined for a given state of what?Read the answer and worked solution →If technology improves, what happens to the production function?Read the answer and worked solution →An isoquant is the set of all input combinations that yield what?Read the answer and worked solution →Why are isoquants negatively sloped?Read the answer and worked solution →In the short run, a factor that cannot be varied is called what?Read the answer and worked solution →In the long run, how many factors of production are fixed?Read the answer and worked solution →How is a period classified as the short run or the long run?Read the answer and worked solution →The relationship between one variable input and output, other inputs constant, is called what?Read the answer and worked solution →Average product of an input is defined as output per unit of what?Read the answer and worked solution →Marginal product of an input is the change in output per unit change in the input when what is held constant?Read the answer and worked solution →TP rises from 10 to 24 as labour goes from 1 to 2. Find MP of the 2nd worker.Read the answer and worked solution →The sum of the marginal products of all preceding units of an input gives what?Read the answer and worked solution →Average product at any level of employment equals the average of all what?Read the answer and worked solution →What does the law of variable proportions say about MP?Read the answer and worked solution →The law of diminishing marginal product is also called what?Read the answer and worked solution →Factor proportions represent which ratio?Read the answer and worked solution →Why does marginal product eventually fall as workers are added?Read the answer and worked solution →What is the shape of the marginal product curve of an input?Read the answer and worked solution →For the first unit of a variable input, how do marginal and average product compare?Read the answer and worked solution →When average product is rising, marginal product must be what?Read the answer and worked solution →Where does the MP curve cut the AP curve?Read the answer and worked solution →Returns to scale arise when all inputs are changed in what manner?Read the answer and worked solution →If doubling all inputs exactly doubles output, which returns to scale hold?Read the answer and worked solution →All inputs rise 10% and output rises only 6%. What holds?Read the answer and worked solution →Which case shows variable proportions, not returns to scale?Read the answer and worked solution →For a Cobb-Douglas function with alpha plus beta equal to 1, which returns to scale hold?Read the answer and worked solution →Cobb-Douglas exponents sum to less than 1. Which returns hold?Read the answer and worked solution →The cost function gives what for each output level?Read the answer and worked solution →Given input prices, which input mix will a firm choose?Read the answer and worked solution →

Worked practice questions

What does a production function give for given inputs?

  1. The maximum possible output
  2. The minimum possible cost
  3. The average revenue earned
  4. The highest selling price
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Correct answer: A. The maximum possible output

It links each input combination to the largest output technology permits, so it describes efficient input use only.

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A production function is defined for a given state of what?

  1. Consumer income level
  2. The state of technology
  3. Government tax policy
  4. The current market price
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Correct answer: B. The state of technology

Technological knowledge fixes the maximum output from each input mix, and better technology gives a new production function.

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If technology improves, what happens to the production function?

  1. It stays the same but costs fall
  2. It becomes a demand function
  3. We get a new production function
  4. It shifts to show lower outputs
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Correct answer: C. We get a new production function

Improved technology raises the maximum output for every input combination, which means a different production function.

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