Econ Test 2 - Custom Scholars
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# Econ Test 2

question
The demand for labor by a profit maximizing firm is determined by
VMPL=W
question
The demand for an input is
the VMP of the input
question
The absolute value of the slope of the isoquant is the
marginal rate of technical substitution
question
The production function is Q=K^.6L^.4. The marginal rate of technical substitution is
2/3KL^-1
question
Whenever an isoquant exhibits a diminishing marginal rate of technical substitution, the corresponding isoquants are
convex to the origin
question
Economies of scope exist when
C(Q1) + C(Q2) > C(Q1,Q2).
question
When there are economies of scope between two products which are separately produced by two firms, merging into a single firm can
accomplish a reduction in cost
question
When there are economies of scope between products, selling off an unprofitable subsidiary could lead to
only a minor reduction in costs
question
Economies of scale exist whenever long-run average costs
decrease as output is increased
question
Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage, there exist
diseconomies of scale
question
Constant returns to scale exist when long-run average costs
remain constant as output is increased
question
Larger firms can produce a product at lower average cost than small firms when
economies of scope exist
question
Two firms producing identical products may merge due to the existence of:
economies of scale
question
Which of the following cost functions exhibits economies of scope over the specified output range?
C(Q1,Q2) = 2 - 0.5Q1Q2 - (Q1)2 + (Q2)2, for all Q1 < 2 and Q2 < 2.
question
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
The marginal product per dollar spent on all inputs is equal.
question
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
The MRTS is equal to the ratio of input prices and the marginal product per dollar spent on all inputs is equal.
question
The demand for video recorders has been estimated to be Qv = 134 - 1.07Pf + 46Pm -2.1Pv - 5I, where Qv is the quantity of video recorders, Pf denotes the price of video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and I is income. Based on the estimated demand equation we can conclude:
video recorders are inferior goods
1 of 17
question
The demand for labor by a profit maximizing firm is determined by
VMPL=W
question
The demand for an input is
the VMP of the input
question
The absolute value of the slope of the isoquant is the
marginal rate of technical substitution
question
The production function is Q=K^.6L^.4. The marginal rate of technical substitution is
2/3KL^-1
question
Whenever an isoquant exhibits a diminishing marginal rate of technical substitution, the corresponding isoquants are
convex to the origin
question
Economies of scope exist when
C(Q1) + C(Q2) > C(Q1,Q2).
question
When there are economies of scope between two products which are separately produced by two firms, merging into a single firm can
accomplish a reduction in cost
question
When there are economies of scope between products, selling off an unprofitable subsidiary could lead to
only a minor reduction in costs
question
Economies of scale exist whenever long-run average costs
decrease as output is increased
question
Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage, there exist
diseconomies of scale
question
Constant returns to scale exist when long-run average costs
remain constant as output is increased
question
Larger firms can produce a product at lower average cost than small firms when
economies of scope exist
question
Two firms producing identical products may merge due to the existence of:
economies of scale
question
Which of the following cost functions exhibits economies of scope over the specified output range?
C(Q1,Q2) = 2 - 0.5Q1Q2 - (Q1)2 + (Q2)2, for all Q1 < 2 and Q2 < 2.
question
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
The marginal product per dollar spent on all inputs is equal.
question
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
The MRTS is equal to the ratio of input prices and the marginal product per dollar spent on all inputs is equal.
question
The demand for video recorders has been estimated to be Qv = 134 - 1.07Pf + 46Pm -2.1Pv - 5I, where Qv is the quantity of video recorders, Pf denotes the price of video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and I is income. Based on the estimated demand equation we can conclude:
video recorders are inferior goods

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