A general equilibrium analysis of a price change in the corn chip market would include an investigation of the impacts in A) the television market. B) the coffee market. C) the salsa market. D) All of the above. ANSWER C
Date: September 9th, 2020
Dell computers has increased production efficiency by A) producing output with fewer inputs. B) expanding the amount of inputs used. C) outsourcing production. D) relying on decreasing returns to scale. ANSWER A
Date: September 9th, 2020
If a technological change occurs such that the production function shifts from q = 10K0.5 L0.5 to q = 10.5K0.3 L0.5, then the technological change is A) both neutral and non-neutral. B) neutral. C) non-neutral. D) Not enough information given. ANSWER A
Date: September 9th, 2020
Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the production function has constant returns to scale. What will be an ideal response? ANSWER When L = L1 and K = K1, q = q1. Let L2 = m ∗ L1 and K2 = m ∗ K1 so […]
Date: September 9th, 2020
Suppose the production function for a certain device is q = L + K. If neutral technical change has occurred, which of the following could be the new production function? A) q = L + 5K B) q = 5 (L + K) C) q = 5L + K D) All of the above […]
Date: September 9th, 2020
If a farmer produces 1000 bushels of corn using ten acres of land and one tractor and is able to produce 2000 bushels of corn using twenty acres of land and one tractor, the farmer has A) increasing returns to scale. B) constant returns to scale. C) decreasing returns to scale. D) no returns to […]
Date: September 9th, 2020
How much do outputs increase when labor and capital increase from 1 to 2 units for the following production function , q = 10L0.5K0.3? A) 7.4 units B) 7 units C) 8 units D) None of the above. ANSWER A
Date: September 9th, 2020
Let the production function be q = ALaKb. The function exhibits constant returns to scale if A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given. ANSWER A
Date: September 9th, 2020
What is one reason “micro-managers” might be less successful than so-called “delegators”? A) Delegators are smarter. B) Delegators enjoy increasing returns to scale. C) Micro-managers suffer decreasing returns to scale. D) Micro-managers have constant returns to scale. ANSWER C
Date: September 9th, 2020
A firm is currently producing 100 widgets using 4 units of labor and 12 units of capital. The firm’s production function exhibits constant returns to scale. How many units of labor and capital are needed to produce 350 widgets? A) L = 14; K = 42 B) L = 15; K = 45 C) L […]
Date: September 9th, 2020
