Suppose the production function for T-shirts can be represented as q = L0.25 K0.75. Show that the isoquants for this function are convex
What will be an ideal response?
The slope of the isoquant is -MPL/MPK = -K/3L. As L increases and K decreases, this value becomes absolutely smaller, implying a flatter slope.
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Refer to Figure 3-1. An increase in taste or preference would be represented by a movement from
A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.
Refer to the above figure. How do you describe what is happening as the economy moves from point A to point C?
A) The economy has acquired new resources that are well suited for producing bread. B) Land that was once used to graze sheep is now being used to grow wheat. C) Resources are becoming unemployed. D) The technology for growing wheat has improved.
In cost-benefit analysis, a low discount rate tends to favor projects with relatively ____ lives
a. short b. long
A monopolist will maximize profits by
a. setting the price at the level that will maximize per-unit profit. b. producing the output where marginal revenue equals total cost and charging a price along the demand curve. c. selling at the price on the demand curve at the output rate where marginal revenue equals marginal cost. d. producing at the output rate where price equals marginal cost.