Question

1- As a firm expands by adding more of the variable input to fixed inputs, it experiences:

a) constant returns, diminishing returns, increasing returns

b) diminishing returns, constant returns, increasing returns

c) increasing returns, constant returns, diminishing returns

d) diminishing returns, increasing returns, constant returns

2-

The Production Function is:

		a curve concave to the origin
		an upside down parabola
		A straight line sloping upward
		An "S" curve

3-

The production function shows

		the relationship between total product, (output or quantity) and the variable input
		the trade off between cranberries and blueberries
		the quantity supplied at various prices
		the quantity demanded at various prices

At Cosi,

2 people make 10 salads in an hour and 3 people make 24 salads in an hour

Marginal Product is

		greater than average product and therefore average product must be increasing
		8
		5
		Best plotted above the Input of 2.5

Answer 1

Answer 1. c) increasing returns, constant returns, diminishing returns

reason- As the firm expands by adding more variable inputs to fixed inputs, it first experiences increasing returns to scale , then constant returns to scale, then diminishing returns to scale.

Answer 2. Upside down parabola

reason- Production function is inverted U shaped is upside down parabola.

Answer 3.the relationship between total product, (output or quantity) and the variable input

reason- The production function shows the relationship between inputs and outputs.

Answer 4.

Marginal Product is greater than average product and therefore average product must be increasing

reason- Marginal product= 14.

Average product= 10/2=5 and 24/3=8.

So MP>AP so AP must rise.