Question

Can someone please help me solve this?

1. A basic assumption of the short run is that a firm: A) B) C) can employ more workers and add more capital to the production process. cannot adjust its workforce or the amount of capital it uses. can reduce the number of workers it uses, but it cannot adjust how much capital it D) can freely adjust the amount of labor and capital that it employs. Use the following to answer question 2: Table 6.1 Production Process 2 Units of Units Addition Units Units Addition Units Units Additional Production Process 1 Production Process3 capofoutput of output output labor produced capital labor produced capital labor produced 10 12 12 12 15 16 17 80 84 87 12 2. (Table 6.1) Diminishing marginal returns to labor occur in production process and diminishing marginal returns to capital occur in production process A) 1;3 B) 2;1 C) 2;3 D) 1; 1 3. Which of the following is (are) example(s) of production functions? I. 56K + 18L II. -2K0802 IIL Q-KL A) II and III B) I II andIII C)I D) I 4. A donut shop has a production function given by Q 50K13Lin, where Q is the number of donuts produced per hour, K is the number of donut fryers (which is fixed at eight in the short run), and L is the number of employed workers. How many donuts can be produced per hour with four workers in the short run? A) 200 B) 167 C) 320 D) 84

Answer 1

1. C
(Basic assumption is that firm can increase or decrease its usage of labor but can not change its usage of capital)

2. A
(In 1, K is held fixed and additional output is decreasing showing diminishing marginal returns to labor. In 3, L is held fixed and additional output is decreasing showing diminishing marginal returns to capital.)

3. B
(All are examples of production function.)

4. A
(L = 4; K = 8; Q = 50K^1/3L^1/2 = 50(8)^1/3(4)^1/2 = 50*2*2 = 200)