Exam 4: Cost

-Refer to Figure above, which shows just three of a firm's various possible short-run average cost curves. Suppose the firm is currently producing 160 units at and average cost of $90 per unit. Which of the following statements is true?

If labour is measured along the horizontal axis and capital is measured along the vertical axis, an increase in the wage rate will cause the isocost line to

If the least-cost input combination doesn't include all inputs, it's called

Suppose a firm's technology is represented by the Cobb-Douglas production function F(L,K) = 5LK. The wage rate is $50 and the rental rate of capital is $10. What is the least-cost combination to produce 100 units of output?

If Q represents a firm's level of output, W represents the wage paid to labour (L) and R is the cost of capital (K), then which of the following represents the firm's isocost line?

Which of the following statements is true?

A firm that is experiencing economies of scale has ______ returns to scale technology and a ______average cost curve.

As a firm with decreasing returns to scale technology increases its output,

-Refer to Table above. Assume the wage rate is $10 and the firm has $1,000 in unavoidable fixed cost. What is the marginal cost of producing 83 units of output?

-Refer to Figure above. Which graph illustrates a firm that experiences economies of scale?

-Refer to Figure above. What is the average cost of producing 290 units of output?

Suppose a firm's short-run production function is given by Q = 3 sqrt(L), where L represents the number of hours of labour employed. The firm has a sunk cost of $500 and the wage rate is $18 per hour. What is the firm's short-run cost function? Solve the production function for L:

Suppose a firm has a production function given by Q = 2?2L?K.If the rental rate of capital is $100 per unit, the wage rate is $1,400 per week and the firm initially has 25 units of capital, what is the firm's short-run cost function?