Exam 5: The Production Process and Costs

Congress is considering legislation that will provide additional investment tax credits to businesses.Effectively,an investment tax credit reduces the cost to firms of using capital in production.Would you expect labor unions to lobby for or against such a bill? (Hint: What impact would such a plan have on the capital-to-labor ratio at the typical firm? )

Which of the following is NOT a measure of productivity?

Cost complementarity exists in a multiproduct cost function when:

Which of the following cost functions exhibits economies of scope when three (3)units of good one and two (2)units of good two are produced?

A production function:

If a firm's production function is Leontief and the wage rate goes up,the:

Given a cost function C(Q)= 200 + 14Q + 8Q²,what is the marginal cost function?

An isocost line:

Suppose that production for good X is characterized by the following production function,Q = 4K^0.5L^0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $12 and the per-unit wage,w,is $20,then the average total cost of using 25 units of capital and 49 units of labor is:

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:

Constant returns to scale exist when long-run average costs:

The value of marginal product of an input is the value of the:

In the text,we showed that the multiproduct cost function $C \left( Q _ { 1 } , Q _ { 2 } \right) = f + a Q _ { 1 } Q _ { 2 } + \left( Q _ { 1 } \right) ^ { 2 } + \left( Q _ { 2 } \right) ^ { 2 }$ exhibits cost complementarity whenever $a < 0$ and economies of scope whenever $f - a Q _ { 1 } Q _ { 2 } > 0$ . a.Can cost complementarity exist without economies of scope? b.Can there be economies of scope when cost complementarities exist?

The marginal cost curve:

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

Standard Enterprises produces an output that it sells in a highly competitive market at a price of $100 per unit.Its inputs include two machines (which cost the firm $50 each)and workers,who can be hired on an as-needed basis in a labor market at a cost of $2,800 per worker.Based on the following production data,how many workers should the firm employ to maximize its profits? Machines Workers Output 2 0 0 2 1 60 2 2 100 2 3 129 2 4 148 2 5 160 2 6 168

The marginal rate of technical substitution:

The production function for good X in the table below exhibits increasing marginal returns to capital over what output range? Production Function far God K Q =(\DeltaQ/\DeltaK) =(Q/K) Mverage Labor Capital Output Product of Capital Product of Capital 9 0 0 - - 9 10 57 5.7 5.70 9 20 324 26.7 16.20 9 30 657 33.3 9 40 1,072 41.5 26.80 9 50 1,524 45.2 30.48 9 60 1,976 45.2 32.93 9 70 2,391 41.5 34.16 9 80 2,724 33.3 34.05 9 90 2,991 33.23 9 100 3,048 5.7 30.48 9 110 3,016 -3.2 27.42 9 120 2,945 -7.1 24.54

Suppose the cost function is C(Q)= 50 + Q − 10Q² + 2Q³.At 10 units of output,the average cost curve is:

Suppose that production for good X is characterized by the following production function,Q = K^0.5L^0.5,where K is the fixed input in the short run.If the per-unit rental rate of capital,r,is $25 and the per-unit wage,w,is $15,then the fixed cost of using 81 units of capital and 9 units of labor is: