The Cobb-Douglas production function is: Q = 1.4L0.6K0.5 . What would be the percentage change in output (?Q) if labor grows by 3.0 and capital is cut by 5.0? HINT: ?Q = (EL ?L) + (EK ?K)
a. ?Q = + 3.0
b. ?Q = + 5.0
c. ?Q = - 0.70
d. ?Q = - 2.50
e. ?Q = - 5.0
QUESTION 2What are the different methods to measure industry concentration?
a. Four-firm concentration ratio.
b. HHI index.
c. Total output
d. a and b only
QUESTION 3Ways to game the budgeting process include
a. delaying sales if just short of a target
b. delaying expenses if just short of a target
c. accelerating sales once a target is met
d. delaying expenses costs once a target is met
QUESTION 4Suppose you have a Cobb-Douglas function with a capital elasticity of output () of 0.28 and a labor elasticity of output () of 0.84 . What statement is correct?
a. There are increasing returns to scale
b. If the amount of labor input (L) is increased by 1, the output will increase by 0.84
c. If the amount of capital input (K) is decreased by 1, the output will decrease by 0.28
d. The sum of the exponents in the Cobb-Douglas function is 1.12.
e. All of the above
QUESTION 5Ways to game the budgeting process include
a. accelerating sales if just short of a target
b. accelerating expenses if just short of a target
c. accelerating sales once a target is met
d. delaying expenses costs once a target is met
QUESTION 6For a firm to reduce competitive intensity, it should
a. Enact barrier to entry
b. Lobby to the government
c. Acquire patents
d. All the above
QUESTION 7The following is a Cobb-Douglas production function: Q = 1.75K0.5L0.5 . What is correct here?
a. A one-percent change in L will cause Q to change by one percent
b. A one-percent change in K will cause Q to change by two percent
c. This production function displays increasing returns to scale
d. This production function displays constant returns to scale
e. This production function displays decreasing returns to scale
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