Suppose a production function is q = K1/2L1/3 and in the short run capital (K) is fixed at 100 . If the wage is 10 and the rental rate on capital is 20, the fixed cost is
a. 2,000
b. 200
c. 20,000
d. 0
QUESTION 2Suppose a cost function is TC = Aq3 + bq2 + cq + d. Then the average variable cost is
a. Aq2 + bq + cq +d/q
b. Aq2 + bq + c
c. Aq3 + bq2 + cq
d. d
QUESTION 3Suppose a cost function is TC = Aq3 + bq2 + cq + d. Then the average total cost is
a. Aq2 + bq + cq +d/q
b. Aq2 + bq + c
c. Aq3 + bq2 + cq
d. d
QUESTION 4Suppose a cost function is TC = Aq3 + bq2 + cq + d. Then the total fixed cost is
a. Aq2 + bq + cq +d/q
b. Aq2 + bq + c
c. Aq3 + bq2 + cq
d. d
QUESTION 5Suppose that a lawn mowing services production function for lawns mowed in a week is M = (LK)1/2, where L is labor hours and K is the amount of capital (mowers and trimmers). The expansion path depends on
a. the wage rate only.
b. the rental rate only.
c. both the wage and rental rates.
d. neither the wage nor rental rates.
QUESTION 6Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. The expansion path depends
a. on the price of corn-based feed only.
b. on the price of soybean-based feed only.
c. on neither the price of corn-based or soybean-based feed.
d. on whether the price of corn-based feed is greater than or less than 2/5 the price of soybean-based feed.
QUESTION 7Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. If the price of corn feed is 4 and corn feed is on the horizontal axis, and the price of soybean feed is 5 and soybean feed lies on the vertical axis, what is expansion path?
a. C =5S/2
b. S =2C/5
c. the horizontal axis
d. the vertical axis
QUESTION 8Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. If the price of corn feed is 2 and the price of soybean feed is 6, what is the cost-minimizing fee combination producing P = 200?
a. C = 100
b. S = 40
c. C = 50, S = 20
d. All points on the P = 200 isoquant would cost the same.
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