Joe's Bar and Grill Uses Two Inputs, Beer and Pretzels

Multiple Choice

Joe's Bar and Grill uses two inputs, beer and pretzels.When the price of beer was $10 a case and the price of pretzels was $20 a case, Joe used 1 case of beer and 2 cases of pretzels a day.When the price of beer was $20 a case and the price of pretzels was $10 a case, Joe used 2 cases of beer and 1 case of pretzels a day.Joe produced the same output in each of these circumstances.

A) Joe has a constant returns to scale production function.
B) Joe has a cost function that exhibits increasing returns.
C) Joe is not minimizing costs.
D) Joe's behavior is consistent with profit maximization.
E) Joe's production function exhibits diminishing marginal product.