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21) The relationship Q = f(K, L) is an example of a

A) cost function.

B) production function.

C) demand equation.

D) profit equation.

28) After some point successive equal increases in a variable
factor of production, when added to a fixed amount of inputs, will
result in smaller increases in output. This is known as

A) the long run.

B) the law of diminishing marginal product.

C) marginal physical product.

D) short run average cost.

33) Suppose that a firm is currently producing 1,000 units of
output. At this level of output, AVC is $1 per

unit, and TFC is $500. What is the firm's TC?

A) $1,500

B) $1,000

C) $501

D) $499

34) Suppose that a firm is currently producing 500 units of
output. At this level of output, TVC = $1,000 and TFC = $2,500.
What is the firms ATC?

A) $2

B) $5

C) $7

D) $10

35) Suppose that when the level of output for the firm
increases from 100 to 110 units, its variable costs increase from
$500 to $700. What is the firm's marginal cost?

A) $5

B) $7

C) $20

D) $200

Answer #1

21) the equation where output is a function of labor and capital is a production function.

The correct option is B

28) after a certain point, successive increase in variabe input given fixed input, additional increase in output is by a lesser amount explains law of diminishing marginal productivity.

The correct option is B

33) AVC= TVC/Q hence TVC = 1000 and FC=500 and total cost = TVC + TFC = 1500

The correct option is A

34) TC = TVC + TFC = 3500 and ATC = TC/Q = 3500/500= 7

The correct option is C

35) marginal cost = dTVC/ dQ

MC= 700-500/(110-100)

MC= 200/10 = 20

The correct option is C

1. If some production function Q(L,K) exhibits and increasing
return to scale, then the marginal cost of production decreases as
output level increases. (a) True (b) False
2. If for some production function Q(L,K) the marginal product
of labor and the marginal product of capital both decreases as
output level increases, then the marginal cost of production
increases as output level increases. (a) True (b) False
3. A firms production function is represented by Q(M,R) = M^3R,
MPM = 3M^2R,...

9. Average cost in the long-run is defined as _____.
TVC/Q
TC/Q
TVC + TFC/Q
none of the above
10. Economies of scale is a characteristic of production where
______.
average costs increase as output increases
total cost decreases as output increases
average cost decreases as output increases
average cost decreases as output decreases
11. Which of the following factors of production is more likely
to be fixed in the short run?
The number of workers.
Changes in electricity consumed....

Consider a firm with the production function
f(L,K)=L1/2K2 Suppose the firm is in the
short run and has a level of capital K = 1. If the cost of labor is
w=2 and the cost of capital is r=2, derive the a) TVC, b) TFC, c)
TC, d) MC, e) ATC, f) AVC, ) AFC. Draw these curves in a relevant
set of well-labelled diagrams. Repeat the exercise if the firm was
in the short run with a capital level...

As a firm increases the level of output that it produces,
short-run average fixed cost
rises and then falls.
remains constant since fixed costs are constant.
decreases.
decreases up to a particular level of output and then
increases.
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Question 22 pts
Suppose that a firm is currently producing 500 units of output.
At this level of output, TVC = $1,000 and TFC = $2,500. What is the
firms ATC?
$2
$5
$7
$10
Flag this Question
Question...

Labor, L(workers)
Output, Q (units per day)
0
0
1
4
2
9
3
18
4
28
5
35
6
40
7
42
8
43
9
40
10
35
What is the marginal return to labor from increasing
employment from 2 to 3 workers?
A. 3
B. 18
C. 9
D. 2
Quantity
Total Cost
495
1500
496
1505
497
1512
498
1520
499
1530
500
1545
501
1562
502
1580
The table above shows the total cost for Happy...

A firm produces output according to the production function.
Q=sqrt(L*K) The
associated marginal products are MPL = .5*sqrt(K/L) and MPK =
.5*sqrt(L/K)
(a) Does this production function have increasing, decreasing, or
constant marginal
returns to labor?
(b) Does this production function have increasing, decreasing or
constant returns to
scale?
(c) Find the firm's short-run total cost function when K=16. The
price of labor is w and
the price of capital is r.
(d) Find the firm's long-run total cost function...

Consider a firm which has the following production function
Q=f(L,K)=4?LK
(MPL=2?(K/L) and MPK=2?(L/K).
(a) If the wage w= $4 and the rent of capital r=$1, what is the
least expensive way to produce 16 units of output? (That is, what
is the cost-minimizing input bundle (combination) given that
Q=16?)
(b) What is the minimum cost of producing 16 units?
(c) Show that for any level of output Q, the minimum cost of
producing Q is $Q.

1. Suppose a short-run production function is described as Q =
30L - 0.05L^2 where L is the number of labors used each hour.
a. Derive the equation for Marginal Product of Labor
b. Determine how much output will the 200th worker
contribute:
c. Determine the amount of labor (L) where output (Q) is
maximized (known as Lmax):
d. If each unit of output (Q) has a marginal revenue (price) of
$5 and the marginal cost of labor is $40...

Suppose a firm’s long-run production function is given by
Q=K^0.25 L^0.25 ,where K is measured in machine-hours per year and
L is measured in hours of labor per year. The cost of capital
(rental rate denoted by r) is $1200 per machine-hour and the cost
of labor (wage rate denoted by w) is $12 per hour.
Hint: if you don’t calculate the
exponential terms (or keep all the decimals when you do), you will
end up with nice numbers on...

Suppose all firms in the market are identical with the following
production function.
x = f(l,k) = A l
bk b
Also, each firm faces a recurring fixed cost FC.
a. Now let A=30, b = 1/3, FC = 1,000,
w = 10 and r = 15. What is the long-run
equilibrium price of output? How many units of output does each
firm produce?
Suppose the market demand is 50,000,000/P2
b. How many firms are in the market in the...

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