Exam 5: The Production Process and Costs

The marginal product of capital of producing 2,991 units of output (find point A) in the above table is

The short-run is defined as the time-frame

The production function in the above table exhibits decreasing marginal returns to capital over what output range?

Larger firms can produce a product at lower average cost than small firms when

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?

When there are economies of scope between products, selling off an unprofitable subsidiary could lead to

In 1995 the U.S.Justice Department sued to block a merger between Microsoft and Intuit, the producer of the nation's best-selling business software.The Justice Department argued that the merger would lessen competition and raise prices of business software.Is there an economic argument that the merger might actually result in lower prices? Explain.

The Leontief production function implies:

The production function for good X exhibited in the above table is for the

The first-order conditions for maximizing profits, $\pi$ = P x F(K,L) - w_L - r_K, are

Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?

The demand for labor by a profit-maximizing firm is determined by

You are the manager of Telecall Inc., a small telemarketing company.Your company pays $10,000 per month for office space.A real estate agent has noticed that you are only using 75 percent of your available space and tells you that Telecall could add $800 per month to its bottom line by renting out the space it does not use.Telecall has been asked to do a new telemarketing campaign for a large credit card company, but this would require it to use the remaining office space.What is the opportunity cost of using the extra office space to handle the credit card company's promotion?

Your firm produces two products, Q₁ and Q₂.An economic consulting firm has estimated your cost function to be

Show that the Cobb-Douglas production function

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?

Costs that change as output changes are:

A production function exhibits constant returns to scale if a twofold (threefold, etc.) increase in all inputs leads to a twofold (threefold, etc.) increase in output.For example, by doubling the use of capital and labor, the firm would exactly double its output. a.What would the average and marginal cost curves look like under constant returns to scale? Explain. b.Give an example of a production function that exhibits constant returns to scale.

It is profitable to hire units of labor as long as the value of marginal product

The creation of a new product is referred to as: