Exam 5: Production and Cost

Currently where "s" and "a" refer to steel and aluminum,and Ps and Pa refer to the prices of steel and aluminum,and MPs and MPa refer to the marginal products of steel and aluminum,respectively,for a firm.Has the firm come up with the right amounts of steel and aluminum,or should it reallocate its resources to make the maximum profit?

A production function of the form Q = 150L^.75 K^.50 exhibits ______ in the long run.

Assume SeatComfy Inc.manufactures table and chairs with the following total cost function,TC = 10,000 + 10Q + 0.1Q²,where Q = quantity of chairs produced.If SeatComfy can sell as many chairs as it wishes at the current market price of $45,how many chairs should it produce to maximize its short-run profits?

Assume the generic production function Q = f (K,L)displays both decreasing returns to capital (K)and decreasing returns to labor (L).Then

Which of the following is true of a production function?

A firm's average total cost is minimized at <>$5/unit when it produces 10 units.What is the marginal cost when the firm produces 10 units?

An independent trucker has to choose one of the four possible combinations of inputs listed below.The two inputs are drivers and machinery.If he buys expensive machinery,then he can hire fewer drivers to deliver the same output.The input combinations are Method 1: 20 drivers,10 machines; Method 2: 50 drivers,2 machines; Method 3: 100 drivers,0 machines; Method 4: 10 drivers,12 machines. Hiring a driver costs $10.Each machine costs $100.Which method should he use?

If the generic production function Q = f (K,L)displays increasing returns to scale,the value of K is fixed in the short run,and the prices of all inputs are held constant,then

In general,which of the following implies that a marginal cost curve will eventually increase as a firm produces more output?

Wanda Weeks is tired of running her small machine tool company.She wishes to sell it in order to use her time and money elsewhere.She is currently earning a salary of $85,000 per year and a 10 percent return on her capital investment.She wants to take a job in a bank and invest her capital in a mutual fund.What issues should she look at before making the decision to change careers?

As output expands from 199 to 200 units,total costs rise from $2,985 to $3,000.At this stage,the marginal cost and average cost of production are

Suppose the production function faced by the firm is Q = A^1/3 B^1/3.If the firm increases the use of both inputs by 1 percent,output will increase by

The curve showing all the combinations of inputs that can be purchased with a given outlay of funds is called a(n)

The ______ represents the additional revenue that comes from using one more unit of input.

Currently, ,where MPs and MPa are the marginal products of steel and aluminum for a company whose production function is Q = s^0.5 a^0.5.Ps = Pa = $1 are the prices of steel and aluminum,respectively,and the company has a total budget of $2 to spend on these inputs.If the market price of the output is $3 per unit,then how many units of s and a should the firm hire? What will be its output,revenue,costs,and profits?

Always Round Tire has a production function of Q = 300 L^.75 K^.5.In the short run,if L = 250 and K = 25,what is the quantity of tires supplied? What happens to the output of tires if L jumps to 300 and then 350? What law does this illustrate?

Always Round Tire has a production function of Q = 300 L^.75 K^.5.If Always Round Tire doubles the size of its production facility-increasing L from 250 to 500 and K from 25 to 50 -what happens to the cost of production,even though we do not know the wages of labor or the price of capital?

Refer to Figure 5.1.Observe the three isoquants depicted and determine which of the following statements is true.

If the price of a variable input increases,then

The general rule for profit maximization in a firm is to