Question 1

Refer to the top graph. At what point does the Average Product (AP) reach its maximum value?

Accepted Answer

Where the Marginal Product (MP) curve intersects the AP curve from above.

Question 2

Based on the bottom graph, what is the relationship between Marginal Cost (MC) and Average Variable Cost (AVC) at the minimum point of the AVC curve?

Accepted Answer

MC equals AVC.

Question 3

If the Marginal Product (MP) of labor is increasing, what happens to the Marginal Cost (MC) of output?

Accepted Answer

MC decreases.

Question 4

In the top graph, what does the area where the MP curve is above the AP curve indicate?

Accepted Answer

AP is rising.

Question 5

According to the bottom graph, what happens to AVC when MC is below AVC?

Accepted Answer

AVC is decreasing.

Question 6

If the quantity of labor increases beyond the point where MP is zero (top graph), what happens to total output?

Accepted Answer

Total output decreases.

Question 7

What does the lowest point on the MC curve (bottom graph) represent?

Accepted Answer

The point where MP is at its maximum.

Question 8

If the AP curve is declining (top graph), what must be true about the MP curve?

Accepted Answer

MP is below AP.

Question 9

Which of the following best explains the U-shape of the MC curve in the bottom graph?

Accepted Answer

Diminishing marginal product of labor.

Question 10

At what point does the MC curve intersect the AVC curve (bottom graph)?

Accepted Answer

At the minimum point of the AVC curve.

Production, Marginal Products, and Cost Curves in Microeconomics

Study Guide - Practice Questions