These eight original questions cover the four lessons in production and costs. They rise in difficulty, and each answer is explained.
Write your own answer first. The timed practice session builder can set the clock.
Questions 1 to 4: core skills
Question 1. A fictional printing shop has a rented print room for three years and can hire or release operators each week. Is it in the short run or the long run? Name one fixed and one variable input.
Answer
It is the short run, because the print room is fixed under the rental. The room is a fixed input, and the number of operators is a variable input.
Question 2. Total product with 1, 2, 3 and 4 workers is 8, 20, 36 and 48 units. Find the marginal product of the third worker.
Answer
MP = 36 − 20 = 16 units.
Question 3. Using Question 2, find the average product with 4 workers, and say whether it is above or below the marginal product of the fourth worker.
Answer
AP = 48 ÷ 4 = 12 units. MP of the fourth worker = 48 − 36 = 12. The two are equal here, so the average is neither rising nor falling at that point.
Question 4. A workshop makes 500 items with 10 workers. Calculate labour productivity.
Answer
500 ÷ 10 = 50 items per worker.
Questions 5 to 8: reasoning with tables
Question 5. The workshop in Question 4 hires 5 more workers and output rises to 690 items. Did productivity rise? Show the working.
Answer
New productivity = 690 ÷ 15 = 46 items per worker, which is lower than 50. Productivity fell, even though output rose by 190 items, because output per worker declined.
Question 6. Give two factors that could raise productivity in a fictional tailoring shop, each with a mechanism.
Answer
Training: workers learn faster stitching methods, so each finishes more garments per day. New machines: faster sewing speed means each worker processes more cloth per hour. Each answer links the factor to a change in output per worker.
Question 7. A fictional stall sells snacks at RM5 each. For 10, 20, 30 and 40 snacks, total cost is RM60, RM85, RM130 and RM190. Find the profit at each output.
Answer
TR = RM50, 100, 150, 200. Profit = 50 − 60 = −10; 100 − 85 = +15; 150 − 130 = +20; 200 − 190 = +10. The profits are −RM10, +RM15, +RM20 and +RM10.
Question 8. From Question 7, state the most profitable output and explain why 40 snacks is not better even though revenue is higher.
Answer
The most profitable output is 30 snacks (RM20 profit). At 40 snacks revenue rises by RM50 but cost rises by RM60, so profit falls to RM10. Higher revenue is not enough; the gap between revenue and cost matters.
If you got these wrong
- Question 1: revisit short run and long run.
- Questions 2 and 3: revisit total, average and marginal quantities.
- Questions 4 to 6: revisit explaining productivity.
- Questions 7 and 8: revisit revenue, cost and profit tables.
Log each slip in the mistake log. For a teacher to go through your attempts, see online one-to-one Economics tuition.