Which one of the following terms is defined as the management of a firm’s long-term investments?
Correct answer(s):
- capital budgeting
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The average product of capital of producing 2,991 units of output (find point B) in the above table is
Correct answer(s):
- 21.9
The production function in the above table exhibits decreasing marginal returns to capital over what output range?
Correct answer(s):
- Between 2,391 and 3,048
The production function in the above table exhibits negative marginal returns to capital over what output range?
Correct answer(s):
- Between 3,016 and 2,945
The production function for good X in the above table exhibits increasing marginal returns to capital over what output range?
Correct answer(s):
- Between 0 and 1,524
The marginal product of capital of producing 2,991 units of output (find point A) in the above table is
Correct answer(s):
- 26.7
In the short run, the marginal cost curve crosses the average total cost curve at
Correct answer(s):
- The minimum point of the average total cost curve
Changes in the price of an input cause
Correct answer(s):
- Slope changes in the isocost line
The point where diminishing marginal returns has begun to affect production, is best characterized by the point where the
Correct answer(s):
- Marginal product curve begins to be negatively sloped
The inputs that a manager uses to alter production are referred to as:
Correct answer(s):
- Variable factors
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
Correct answer(s):
- The marginal product per dollar spent on all inputs is equal
Which of the following “costs” could a firm that wants to remain in business avoid if it halted current production?
Correct answer(s):
- Variable costs
If a firm’s production function is Leontief and the price of capital goes down the
Correct answer(s):
- Cost minimizing combination of capital and labor does not change
For the cost function C(Q) = 50 + 4Q + 2Q2, the total variable cost of producing 7 units of output is
Correct answer(s):
- 126
For the cost function C(Q) = 75 + 4Q + 2Q2, the marginal cost of producing 5 units of output is
Correct answer(s):
- 24
Suppose the production function is given by Q = 4K + 6L. What is the average product of capital when 10 units of capital and 5 units of labor are employed?
Correct answer(s):
- 7
Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?
Correct answer(s):
- 5
Suppose the production function is Q = min {3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?
Correct answer(s):
- 6
Suppose the marginal product of labor is 10 and the marginal product of capital is 8. If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use
Correct answer(s):
- More capital and less labor
Two firms producing identical products may merge due to the existence of:
Correct answer(s):
- Economies of scale