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If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 25 is
Correct answer(s):
- 1/5
You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 4, and MPK = 40 the firm:
Correct answer(s):
- Should use more K and less L to cost minimize
The production function for a competitive firm is Q = K.5L.5. The firm sells its output at a price of $10, and can hire labor at a wage of $5. Capital is fixed at 25 units. The profit-maximizing quantity of labor is
Correct answer(s):
- None of the statements associated with this question are correct
The production function Q = L.5K.5 is called
Correct answer(s):
- Cobb Douglas
You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 20, and MPK = 40 the firm:
Correct answer(s):
- Should use more L and less K to cost minimize
Which of the following statements is incorrect?
Correct answer(s):
- Fixed costs are always greater than sunk costs
If a firm’s production function is Leontief and the wage rate goes up the
Correct answer(s):
- Cost minimizing combination of capital and labor does not change
For the cost function C(Q) = 100 + 2Q + 3Q2, the total variable cost of producing 2 units of output is ____?
Correct answer(s):
- 16
For the cost function C(Q) = 100 + 2Q + 3Q2, the average fixed cost of producing 2 units of output is
Correct answer(s):
- 50
For the cost function C(Q) = 100 + 2Q + 3Q2, the marginal cost of producing 2 units of output is
Correct answer(s):
- 14
Suppose the production function is given by Q = 3K + 4L. What is the average product of capital when 5 units of capital and 10 units of labor are employed?
Correct answer(s):
- 11
Suppose the production function is given by Q = 3K + 4L. What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?
Correct answer(s):
- 3
Suppose the production function is given by Q = min {K, L}. How much output is produced when 4 units of labor and 9 units of capital are employed?
Correct answer(s):
- 9
Suppose the production function is given by Q = min{K, L}. How much output is produced when 10 units of labor and 9 units of capital are employed?
Correct answer(s):
- 9
Suppose the production function is given by Q = 3K + 4L. What is the marginal product of capital when 10 units of capital and 10 units of labor are employed?
Correct answer(s):
- 3
Suppose the production function is given by Q = 3K + 4L. What is the average product of capital when 10 units of capital and 10 units of labor are employed?
Correct answer(s):
- 7
Suppose the production function is Q = min {K, 2L}. How much output is produced when 4 units of labor and 9 units of capital are employed?
Correct answer(s):
- 8
Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should use
Correct answer(s):
- More labor and less capital
Suppose that a consumer’s preferences are well behaved in that properties 4-1-4-4 are satisfied and the initial equilibrium consumption bundle consists of 100 units of X and 50 units of Y. If PX increases such that the new equilibrium consumption bundle is 150 units of X and 75 units of Y, then goods X and Y are
Correct answer(s):
- Complements
Suppose that a consumer’s preferences are well behaved in that properties 4-1-4-4 are satisfied and the initial budget constraint is given by 300 = 2X + 4Y. At the initial budget constraint, this consumer purchases 100 units of good X and 25 units of good Y. Suppose the price of X increases to $4 per unit resulting in a new consumption bundle consisting of 60 units of X and 15 units of Y. Then, slope of the inverse demand for good X over this consumption range is
Correct answer(s):
- -0.05