Suppose you are a manager of a factory. You purchase five (5) new machines at one million dollars each. If you can resell two of the machines for $500,000 and three of the machines for $200,000, what are the sunk costs of purchasing the machines?

  • $3.4 million

In order to minimize the cost of producing a given level of output, a firm manager should use more inputs when:

  • Its price falls
Which of the following sets of economic data is minimizing the cost of producing a given level of output?
  • MPL = 20, MPK = 40, w = $16, r = $32
In order for isoquants to have a diminishing marginal rate of substitution they must be:
  • None of the statements associated with this question are correct
Given the production function Q = min {4K, 3L}, what is the average product of capital when 8 units of capital and 16 units of labor are used?
  • 4
Suppose the production function is given by Q = K1/2L1/2, and that Q = 30 and K = 25. How much labor is employed by the firm?
  • 36

Given the linear production function Q = 10K + 5L, if Q = 10,000 and K = 500, how much labor is utilized?

  • 1,000 units
Firm managers should use inputs at levels where the:
  • Marginal benefit equals marginal cost and value marginal product of labor equals wage