Question

QUESTION 7

1. The function q= 2K + L exhibits:

   	a.	constant returns to scale
   	b.	increasing returns to scale
   	c.	decreasing returns to scale
   	d.	any of the above depending on the values for K and L

10 points   

QUESTION 8

1. The short run is defined to be the period of time during which:

   	a.	at least one input is fixed
   	b.	all inputs are variable
   	c.	at least one input is variable
   	d.	all inputs are fixed

10 points   

QUESTION 9

1. A donut shop has a production function given by q = 10KL², where q is the number of donuts produced per hour and K is the number of fryers (which is fixed at 6 in the short run), and L is the number of workers. Which of the following best represents the equation of the firm's short run production function?

   	a.	q = 100L1/2
   	b.	q = 60L2
   	c.	q=10KL
   	d.	q = 60L

10 points   

QUESTION 10

1. A new technology (technological progress) will cause the total product curve to shift _____ and the isoquant to shift _____.

   	a.	downward; (inward (toward the origin)
   	b.	upward; outward (away from the origin)
   	c.	downward; outward (away from the origin)
   	d.	upward; inward (toward the origin)

Answer 1

The function q= 2K + L

If we multiply this production function by a, then

q=2aK+aL

q=a(2K+L)

q=aq

Since power of a is one, so this production function shows constant return to scale.

Hence option a is the correct answer.

8.

The short run is defined as a planning period in which at least one factors of production are considered to be fixed in quantity.

Hence it can be said that the short-run is a time period in which at least one input is fixed.

Hence option a is the correct answer.

9.

As it has been given that a donut shop has a production function given by

q = 10KL²,

where q is the number of donuts produced per hour and K is the number of fryers (which is fixed at 6 in the short run), and L is the number of workers.

Production function in terms of labor only.

q=10(6)L²

q=60 L²

Hence option b is the correct answer.

10.

A new technology (technological progress) will cause the total product curve to shift upward and the isoquant to shift outward (away from origin).

Hence option b is the correct answer.