The recipe that defines the maximum amount of output that can be produced with K units of capital and L units of labor is the:
Correct answer(s):
- Production function
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The feasible means of converting raw inputs such as steel, labor, and machinery into an output are summarized by:
Correct answer(s):
- Technology
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 one unit. The maximum profits are
Correct answer(s):
- 5
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 one unit. The profit-maximizing quantity of labor is
Correct answer(s):
- 1
If the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 is
Correct answer(s):
- None of the statements associated with this question are correct
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
Correct answer(s):
- The MRTS is equal to the ratio of input prices and the marginal product per dollar spent on all inputs is equal
For a cost function C = 100 + 10Q + Q2, the average fixed cost of producing 10 units of output is
Correct answer(s):
- 10
For a cost function C = 100 + 10Q + Q2, the average variable cost of producing 20 units of output is
Correct answer(s):
- 30
For a cost function C = 100 + 10Q + Q2, the marginal cost of producing 10 units of output is
Correct answer(s):
- None of the statements associated with this question are correct
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