Production and costs in the short run and long run: Practice Questions

A local bakery operating in the short run wants to increase its production of cakes from 100 to 150 per day. Which of the following actions would most directly involve adjusting a variable factor of production?

A firm's total product (TP) schedule for different units of labour (L), while capital is fixed, is given below:

Number of Workers (L) | Total Product (TP)
--- | ---
0 | 0
1 | 10
2 | 25
3 | 35
4 | 40
5 | 42

Based on this schedule, at which point does the law of diminishing marginal returns begin to operate?

Which of the following is most likely to be a fixed cost for a firm in the short run?

In economics, which of the following statements correctly defines the short run for a firm?

A small garment factory produces shirts. The following table shows the total output for different numbers of workers, assuming capital is fixed:

Number of Workers | Total Product (shirts per day)
--- | ---
1 | 15
2 | 35
3 | 60
4 | 80
5 | 90

What is the average product of labour when 4 workers are employed?

Explain, in terms of the factors of production, the defining characteristic that distinguishes the short run from the long run for a firm.

Distinguish between the short run and the long run in production by referring to the flexibility of factors of production.

A furniture manufacturer is operating in the short run. Identify which of the following is most likely to be a fixed factor of production for the firm: the quantity of wood used, the number of carpenters hired, or the size of the factory building. Briefly explain your choice.

A factory producing wooden chairs has the following production and cost structure in the short run. The factory employs a fixed number of woodworking machines, and labour is the only variable factor of production. The total fixed cost is \$500\).

(a) Calculate the Average Product (AP) and Marginal Product (MP) of the 3rd worker. (2 marks)

(b) Calculate the Average Total Cost (ATC) when 4 workers are employed. (1 mark)

(c) Define variable cost and identify the variable cost in this scenario. (2 marks)

A small workshop produces handmade leather wallets. The table below shows the production schedule in the short run, where capital (sewing machines) is fixed and labour (number of workers) is the only variable factor of production.

(a) Define fixed factor and variable factor of production, and identify one example of each for this workshop.

(b) Calculate the Average Product (AP) and Marginal Product (MP) for the 3rd and 4th workers.

(c) Explain why this workshop cannot change the number of sewing machines in the short run but can do so in the long run.