Which of the following is possible in a 2-input production technology.
A. The technology has increasing returns to scale but diminishing marginal product of all inputs.
B. The technology has increasing returns to scale but diminishing marginal product of all but one input.
C. The technology has decreasing returns to scale but increasing marginal product of one input.
D. (a) and (b)
E. (a) and (c)
F. (b) and (c)
G. None of the above
H. All of the above
Answer: D
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If a person is risk neutral, then she
A) is indifferent about playing a fair game. B) will pay a premium to avoid a fair game. C) has a horizontal utility function. D) has zero marginal utility of wealth.
When the absolute price elasticity of demand is greater than 1, demand is
A) elastic. B) unit-elastic. C) inelastic. D) undetermined without more information.
Consuming goods until the ratio of marginal utilities of the goods is equal to the ratio of their prices is consistent with maximizing total utility
a. True b. False
Suppose a state has the following individual income tax structure. The first $20,000 that an individual earns is taxed at 5%. The next $30,000 is taxed at 10%. Any income exceeding $50,000 is taxed at 20%. Based on this tax structure, if a person's income rises from $45,000 to $55,000 . his marginal tax rate is:
a. 25% b. 20% c. 10% d. 15%