A firm is defined as
a. a president, some vice presidents, and some employees.
b. any organization that wants to make a profit.
c. any accumulation of productive assets.
d. any organization that turns inputs into outputs.
QUESTION 2In a two-input model you can tell that a non-optimal short-run production decision is being made if
a. all decisions in the short run are nonoptimal
b. the rate of technical substitution is equal to the ratio of the input prices
c. the rate of technical substitution is not equal to the ratio of the input prices
QUESTION 3When isoquants get progressively closer together there is
a. increasing returns to scale
b. decreasing returns to scale
c. constant returns to scale
QUESTION 4When isoquants get progressively further apart there is
a. increasing returns to scale
b. decreasing returns to scale
c. constant returns to scale
QUESTION 5Suppose electricity (E) can be produced with coal (C) or gas (G) to operate steam turbines (T). Suppose gas is more efficiently burned than coal but that they are otherwise perfect substitutes. E = min((G + .5C), T). The isoquants between gas and coal will be
a. hyperbolas
b. quarter circles
c. straight lines
QUESTION 6If Q = K1/3L2 the MPK is
a. constant
b. diminishing
c. increasing
QUESTION 7If Q = K1/3L2 the MPL is
a. constant
b. diminishing
c. increasing
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