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27. The Piranha Brothers Corporation produces porcelain lupines. In the long run, its production exhibits decreasing returns to scale. This decreasing returns to scale can be caused by a. management difficulties. b. a decrease in input prices. c. specialization. d. diminishing marginal returns to the variable input. c. decreasing costs.

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8 Jan 2018
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Related questions

A firms product function is Q=5L^0.5K^0.5. Labor costs $40 per unit (Pl=$40) and capital costs $10 per unit (Pk=$10). K=16 in the short run.

5. Determine the firms short run cost function
A. C=160+2Q^2
B. C= 640+Q^2/20
C. C= 160+Q^2/10
D. C= 640+q^2/10

6. Determine the level of output that minimizes SAC for the firm.
A. 40
B. 80
C. 113
D. 135

7. If K is not fixed, determine the lease cost combination of L and K to produce 1000units of Q
A. L=100, K=400
B. L=100, K=25
C. L=200, K=200
D. L=400, K=100

8. Derive the long-run cost function for the firm.
A. C=4q
B. C=17q
C. C=8q
D. C=10q

9. Suppose the production of a firm is Q=5+2K+L. Which of the following statements is correct?
A. The firms productions exhibits constant returns to scale.
B. The firms production exhibits increasing returns to scale.
C. The firms production exhibits decreasing returns to scale.
D. The firms production exhibits first increasing returns to scale and then decreasing to returns to scale.

10. Suppose the production function of a firm is Q=5+2K+L. Which of the following statements is correct.
A. the firms LAC is increasing as the firm expands Q in the long run.
B. The firms LAC is decreasing as the firm expands Q in the long run.
C. The firms LAC is constant as the firm expands Q in the long run.
D. The firms LAC is first decreasing and then increasing as the firm expands Q in the long run.

Indicate which one of the following statements is true.

Select one:

a. When the law of diminishing returns takes effect, a firm's average product will start to decrease.

b. Stage I of the production process ends at the point where the law of diminshing returns occurs.

c. Decreasing returns to scale occurs when a firm's increase in all inputs results in a proportionately lower increase in output.

d. Average product (AP) can never be lower than the marginal product (MP).

36) A firm encountering economies of scale over some range of output will have a:

a) rising long-run average cost curve.

b) falling long-run average cost curve.

c) constant long-run average cost curve.

d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

a) economies of scale.

b) normative economies.

c) diminishing marginal returns.

d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) increasing the average total costs.

40) Economies and diseconomies of scale explain why the:

a) short-run average fixed cost curve declines so long as output increases.

b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.

c) long-run average total cost curve is typically U-shaped.

d) short-run average variable cost curve is U-shaped.

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