Test Your Knowledge: Short Run Production Concepts Quiz (TP, AP, MP)

📚 Quick Study Guide

• 📈 Total Product (TP): The total quantity of output a firm can produce using a given amount of inputs. Think of it as the overall production level.
• ➗ Average Product (AP): The average output produced per unit of input. Calculated as: $AP = \frac{TP}{L}$, where L is the amount of labor. It shows the productivity of each input on average.
• ➕ Marginal Product (MP): The additional output produced by adding one more unit of input. Calculated as: $MP = \frac{\Delta TP}{\Delta L}$. It indicates the change in total product from adding one more unit of input.
• 🧩 Relationship between AP and MP: When MP > AP, AP is increasing. When MP < AP, AP is decreasing. When MP = AP, AP is at its maximum.
• ⏳ Law of Diminishing Returns: As more and more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. This is a fundamental concept in short-run production.

🧪 Practice Quiz

1. Which of the following best describes Total Product (TP)?
   1. The additional output from one more unit of input.
   2. The average output per unit of input.
   3. The total quantity of output produced.
   4. The cost of producing one unit of output.
2. Average Product (AP) is calculated as:
   1. $\frac{\Delta TP}{\Delta L}$
   2. $\frac{L}{TP}$
   3. $TP * L$
   4. $\frac{TP}{L}$
3. Marginal Product (MP) measures:
   1. The total output produced.
   2. The average output produced per unit of input.
   3. The change in total output from adding one more unit of input.
   4. The cost of producing one unit of output.
4. When Marginal Product (MP) is greater than Average Product (AP), Average Product (AP) is:
   1. Decreasing.
   2. Increasing.
   3. Constant.
   4. Negative.
5. The Law of Diminishing Returns states that:
   1. Total Product always increases at a constant rate.
   2. Marginal Product always increases.
   3. Marginal Product will eventually decrease as more variable input is added to a fixed input.
   4. Average Product will always decrease.
6. If Total Product (TP) is 100 units and the amount of labor (L) is 10, what is the Average Product (AP)?
   1. 1000
   2. 0.1
   3. 10
   4. 110
7. If Total Product increases from 200 to 220 units when labor increases by 1 unit, what is the Marginal Product?
   1. 20
   2. 220
   3. 2
   4. 420