Econ Test 2

Q: 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.

Q: 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.

Q: 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

question

The demand for labor by a profit maximizing firm is determined by

answer

VMPL=W

question

The demand for an input is

answer

the VMP of the input

question

The absolute value of the slope of the isoquant is the

answer

marginal rate of technical substitution

question

The production function is Q=K^.6L^.4. The marginal rate of technical substitution is

answer

2/3KL^-1

question

Whenever an isoquant exhibits a diminishing marginal rate of technical substitution, the corresponding isoquants are

answer

convex to the origin

question

Economies of scope exist when

answer

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

answer

accomplish a reduction in cost

question

When there are economies of scope between products, selling off an unprofitable subsidiary could lead to

answer

only a minor reduction in costs

question

Economies of scale exist whenever long-run average costs

answer

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

answer

diseconomies of scale

question

Constant returns to scale exist when long-run average costs

answer

remain constant as output is increased

question

Larger firms can produce a product at lower average cost than small firms when

answer

economies of scope exist

question

Two firms producing identical products may merge due to the existence of:

answer

economies of scale

question

Which of the following cost functions exhibits economies of scope over the specified output range?

answer

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?

answer

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?

answer

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:

answer

video recorders are inferior goods

1 of 17

question

The demand for labor by a profit maximizing firm is determined by

answer

VMPL=W

question

The demand for an input is

answer

the VMP of the input

question

The absolute value of the slope of the isoquant is the

answer

marginal rate of technical substitution

question

The production function is Q=K^.6L^.4. The marginal rate of technical substitution is

answer

2/3KL^-1

question

Whenever an isoquant exhibits a diminishing marginal rate of technical substitution, the corresponding isoquants are

answer

convex to the origin

question

Economies of scope exist when

answer

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

answer

accomplish a reduction in cost

question

When there are economies of scope between products, selling off an unprofitable subsidiary could lead to

answer

only a minor reduction in costs

question

Economies of scale exist whenever long-run average costs

answer

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

answer

diseconomies of scale

question

Constant returns to scale exist when long-run average costs

answer

remain constant as output is increased

question

Larger firms can produce a product at lower average cost than small firms when

answer

economies of scope exist

question

Two firms producing identical products may merge due to the existence of:

answer

economies of scale

question

Which of the following cost functions exhibits economies of scope over the specified output range?

answer

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?

answer

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?

answer

The MRTS is equal to the ratio of input prices and the marginal product per dollar spent on all inputs is equal.

question

answer

video recorders are inferior goods

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Econ Test 2

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