Please choose the correct answer for each question. Please answer all questions
9. An isocost line reveals the
a. Costs of inputs needed to produce along an isoquant.
b. Costs of inputs needed to produce along an expansion path.
c. Input combinations that can be purchased with a given outlay of funds.
d. Output combinations that can be produced with a given outlay of funds.
10. Suppose that q = 2K + 4L represents a firmâs production process where K is units of capital, L is units of labor, and q is output. Suppose also that w=1.5r, where w is the price of a unit of labor and r is the price of a unit of capital. Based on this information we know that a cost-minimizing producer will choose to use:
a. Only labor to produce their output.
b. Only capital to produce their output.
c. Two-thirds capital and one-third labor.
d. Two-thirds labor and one-third capital.
11. If a production function exhibits increasing returns to scale, then
a. A doubling of inputs generates more than double the original level of output.
b. The producer experiences economies of scale.
c. Average cost per unit is falling as production increases.
d. All of the above.
12. The production function f(L,K) = 3LuKv, where (u+v)<1, exhibits:
a. Constant returns to scale.
b. Increasing returns to scale.
c. Decreasing returns to scale.
d. None of the above.
Please choose the correct answer for each question. Please answer all questions
9. An isocost line reveals the
a. Costs of inputs needed to produce along an isoquant.
b. Costs of inputs needed to produce along an expansion path.
c. Input combinations that can be purchased with a given outlay of funds.
d. Output combinations that can be produced with a given outlay of funds.
10. Suppose that q = 2K + 4L represents a firmâs production process where K is units of capital, L is units of labor, and q is output. Suppose also that w=1.5r, where w is the price of a unit of labor and r is the price of a unit of capital. Based on this information we know that a cost-minimizing producer will choose to use:
a. Only labor to produce their output.
b. Only capital to produce their output.
c. Two-thirds capital and one-third labor.
d. Two-thirds labor and one-third capital.
11. If a production function exhibits increasing returns to scale, then
a. A doubling of inputs generates more than double the original level of output.
b. The producer experiences economies of scale.
c. Average cost per unit is falling as production increases.
d. All of the above.
12. The production function f(L,K) = 3LuKv, where (u+v)<1, exhibits:
a. Constant returns to scale.
b. Increasing returns to scale.
c. Decreasing returns to scale.
d. None of the above.
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