A firm’s production function can be characterized by the equation Q=16L+2K
Content
A firm’s production function
can be characterized by the
equation Q=16L+2K Answer
Click the below link to access the answer
A firm’s production function can be characterized by the equation Q=16L+2K Answer
Please indicate whether the claim is true or false (3 marks). You must provide
support/rationale for your answer for full credit.
a) A firm’s production function can be characterized by the equation Q=16L+2K. Claim:
This firm’s production technology exhibits diminishing marginal rate of technical
substitution (L for K).
b) A firm’s fixed proportion production function can be described by the equation
Q=min(L,K). Claim: The firm’s optimal mix of inputs will be inversely proportional to the
input prices.
c) Suppose a firm requires 20 units of labour and 10 units of capital to produce 1000 units
of output. The same firm requires 40 units of labour and 25 units of capital to produce
2000 units of output. Claim: This indicates managerial diseconomies of scale for this firm
at these output levels.
d) Consider a firm whose average variable cost is greater than the price of its output in the
short run. Claim: This firm may operate in the short run in order to recoup some of its
non-sunk fixed costs.
e) Consider a market where demand is given by Q=21-P and supply is given by Q=2P.
Claim: If there is a price ceiling of $5, consumer surplus will be at least $50.
A firm’s production function can be characterized by the equation Q=16L+2K Answer
can be characterized by the
equation Q=16L+2K Answer
Click the below link to access the answer
A firm’s production function can be characterized by the equation Q=16L+2K Answer
Please indicate whether the claim is true or false (3 marks). You must provide
support/rationale for your answer for full credit.
a) A firm’s production function can be characterized by the equation Q=16L+2K. Claim:
This firm’s production technology exhibits diminishing marginal rate of technical
substitution (L for K).
b) A firm’s fixed proportion production function can be described by the equation
Q=min(L,K). Claim: The firm’s optimal mix of inputs will be inversely proportional to the
input prices.
c) Suppose a firm requires 20 units of labour and 10 units of capital to produce 1000 units
of output. The same firm requires 40 units of labour and 25 units of capital to produce
2000 units of output. Claim: This indicates managerial diseconomies of scale for this firm
at these output levels.
d) Consider a firm whose average variable cost is greater than the price of its output in the
short run. Claim: This firm may operate in the short run in order to recoup some of its
non-sunk fixed costs.
e) Consider a market where demand is given by Q=21-P and supply is given by Q=2P.
Claim: If there is a price ceiling of $5, consumer surplus will be at least $50.
A firm’s production function can be characterized by the equation Q=16L+2K Answer
