What is a problem with using a production function of the form Q = aK + bL (a > 0, b > 0)?
A. The marginal products of the inputs do not have diminishing marginal returns.
B. MRTS is constant.
C. A positive output can be produced when one input is not used.
D. both a and b
E. all of the above
Answer: E
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What is the analytically correct way to allocate joint costs or to determine the specific costs of products produced jointly (such as the view and the food from a restaurant with an excellent view)?
A) By comparing marginal costs B) By comparing all costs other than sunk costs C) By subtracting the total costs from the total revenue D) By using the prevailing interest rate to discount the stream of expected future costs and benefits E) There is no analytically correct way to do so.
The above figure shows the marginal benefits and marginal costs of a college education. The efficient number of students is
A) 0. B) 10 million. C) 15 million. D) 25 million.
Refer to Table 11-7. What is the variable cost of production when the firm produces 115 lanterns?
A) $1,556 B) $1,157 C) $956 D) $10.05
Evidence from the United States during the period 1973-2002 indicates that the value of the dollar and the measure of the ________ interest rate rose and fell together
A) real B) nominal C) expected D) actual