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Production Theory

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CHAPTER 11

BACKGROUND TO SUPPLY: THE THEORY OF PRODUCTION AND COST

Grading

* straightforward questions & definitions
** challenging questions
*** more challenging questions

MULTIPLE CHOICE QUESTIONS

In economics, the short run is a period of time (*)

2 of one year or less.

3 in which all inputs are variable.

4 in which all inputs are fixed.

5 in which the quantity of at least one input is fixed and the quantities of the other inputs can be varied.

6 in which all inputs are variable but technology is fixed.

Which of the following statements is correct? (*)

2 The short run is a time period of one year or less.

3 The short run is a period of time during which the quantities of all inputs can be varied, but technology is held constant.

4 The short run is a period of time during which the quantity of at least one input is fixed and the quantities of the other inputs can be varied.

5 The long run is a period of time during which the quantities of all factor inputs are fixed.

6 The time period separating the short run from the long run is at least 3 months.

Answer Questions 3 and 4 with reference to the following table, which shows the short-run production function of a polo ball manufacturer.

|Number of machines |Number of workers |Output |
| | |(polo balls / day) |
|8 |0 |0 |
|8 |1 |6 |
|8 |2

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