A Cobb-Douglas production function:
A) exhibits constant returns to scale.
B) exhibits increasing returns to scale.
C) exhibits decreasing returns to scale.
D) can exhibit constant, increasing, or decreasing returns to scale.
D
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Efficiency in a market is achieved when
a. a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. b. the sum of producer surplus and consumer surplus is maximized. c. all firms are producing the good at the same low cost per unit. d. no buyer is willing to pay more than the equilibrium price for any unit of the good.
Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can also catch more fish per hour than can Maryann. Therefore:
A. Maryann should specialize in the activity for which she has a comparative advantage. B. Ginger should specialize in the activity for which she has an absolute advantage. C. there are no gains to specialization and trade for Maryann. D. there are no gains to specialization and trade for Ginger.
Bob's new startup goes public and sells shares of future profits. Bob's startup is best described as a a. saver or as a supplier of funds
b. saver or as a demander of funds. c. borrower or as a supplier of funds. d. borrower or as a demander of funds.
A market equilibrium will generate the largest possible surplus when:
A. there are no external benefits and external costs. B. there is perfect competition. C. perfect information is available. D. All of these.