In the short run with fixed amount of at least one input, the law of diminishing returns must apply, causing the firms average variable cost of production to increase eventually. true or false?

Q: Suppose the production function is q = 6L0.60K0.90. Determine the long-run capital- to-labor ratio…

A: At optimum where production is maximised, marginal rate of technical substitution equals price ratio…

Q: The law of diminishing returns happens when each additional unit of a variable input results in a…

A: The law of diminishing returns is also known as law of variable proportion. It is applicable on…

Q: Find out the maximum possible output for a firm with 12 units of L and 24 units of K when production…

A:

Q: If a firm has economies of scale, it must have increasing returns to scale. True or false? PLEASE…

A: Economies of scale means reducing production cost by increasing output at a large scale.

Q: When a firm is using a technically efficient input combination, the firm is also producing in an…

A: False statement

Q: average total cost of using 81 units of capital and 9 units of labor is:

A: The average total cost(ATC) is the per-unit total cost(TC) for production. This is TC divided by the…

Q: A Cobb-Douglas production function for new company is given by ?(?, ?) = ?³/⁵ ?²/⁵ where K…

A:

Q: Find out the maximum possible output for a firm with zero unit of L and 10 units of K when its…

A:

Q: A firm is producing 20 units with an average total cost of $25 and a marginal cost of $15. If it…

A: Average total cost is total cost divided by total output produced,  ATC = TC / Q Marginal cost is…

Q: Question 5 Show that if a production function exhibit constant returns to scale, then the cost…

A: Constant returns to scale means when inputs increases by some percentage then output increases by…

Q: If a firm has a constant returns to scale production function F(K,L), then the ratio of inputs K L…

A: In long run firm experiences return to scale on its production function which are 1.Constant return…

Q: In the previous Problem Set question, we started looking at the cost function C (x), the cost of a…

A: Cost function is given by C(x) = 0.04x3-20x+350

Q: A fast food restaurant currently pays $5 per hour for servers and $50 per hour to rent ovens and…

A: Cost of production: These are the expenses faced by a firm for producing goods and services.

Q: Modified True or False: State whether each statement is true or false. If the statement is false,…

A: The diminishing returns occurs in the short run. All factor of production are not variable in the…

Q: Q47 In the long run, the law of diminishing marginal returns... a. Sometimes holds, depending on…

A: Option E Law of diminishing marginal returns shows that when an additional unit of production is…

Q: If a production function exhibits decreasing returns to scale, average cost will decrease as output…

A: Average cost is the per-unit cost of output.

Q: The long run is a period of time, or a time frame, in which        all resources are fixed.…

A: A long run in the economics is the time when the manufacturers and producers have the flexibility of…

Q: Show that if the production function is concave, the cost function is convex (in y).

A: Single input and single output case The production function is Concave. the input prices Y are…

Q: Answer all the following seven parts. (a) Show the conditions for a Cobb-Douglas production function…

A: The term "long-run" refers to a period during which the production function is determined solely by…

Q: If Q = 2LK2 , what happens to average cost as the firm expands (produces more)? a.AC reaches its…

A: Cobb-Douglas production function of Q=ALa Kb with a+b>1 shows increasing returns to scale.

Q: Output is produced according to a production process given by: Q = 4LK, where L is the quantity of…

A: A production function represents the relationship of the manufacturing output with the given factors…

Q: Explain why an increase in the price of an input must typically cause an increase in the long-run…

A: As we know in long run , firms can increase both factors simultaneously and due to this firm…

Q: Find out the maximum possible output for a firm with 12 units of L and 24 units of K when its…

A: We have to find maximum possible output for a firm with,  Labour (L) = 12 units  Capital (K) = 24…

Q: A farmer uses K units of machinery and L hours of labor to produce C tons of corn, with the…

A: An rational optimizing firm produces at the point where the marginal rate of technical substitution…

Q: Consider the following information about the input choices and prices, produci the same output in…

A: Cost minimization refers to optimal usage of factors of production such that for production of a…

Q: Assume the following production function: q = √k + √l a) Determine the cost function and the…

A: Cost is minimized when MPL / MPK = w/r MPL = ∂q/∂l = (1/2) / (l1/2) MPK = ∂q/∂k = (1/2) / (k1/2)…

Q: “Sunk cost is a fixed cost, but not in the long term.” Is this statement true or false? Explain!

A: In an economy, the cost is classified in different forms according to its effect on organizational…

Q: Q) The production function       Q = L1/2K   exhibits: Group of answer choices a) Increasing…

A: Given  Production function  Q= L1/2K       .......... (1) To know the return to scale, we increase…

Q: . If a firm has economies of scale, it must have increasing returns to scale. True or false? EXPLAIN…

A: Economies of scale provides cost advantage to the firm.Firm is able to lower average cost through…

Q: If a production function exhibits decreasing returns to scale, then the average variable costs are…

A: ANSWER STEP-1 If A Production Function Exhibits Decreasing Returns To Scale, Then The Average…

Q: Consider a firm that enjoys economies of scale. • If this firm wants to produce 25% more output, it…

A: In a market, economies of scale refers to the situation when a firm is experiencing an inverse…

Q: Which of the following statements is true? Costs are always explicit, never implicit. Costs are…

A: Cost is the expenditure incurred by the firm on purchase of factors of production for the production…

Q: Original per unit cost of a hat New cost after the price decrease in labour if insufficient time to…

A: Originally 10 hats are produced using 16 capital and 7 labour. cost of capital = $10  cost of…

Q: At zero level of production, _______ cost is always zero

A: Whenever production starts, the firm has to incur costs such as rent of the property such as…

Q: The short run is the time frame A) during which the quantities of all resources are fixed. B) during…

A: Production takes place in the short run while all planning is done in the long run.

Q: Suppose the production function is q = 6L0.60K0.90. Determine the long-run capital- to-labor ratio…

A: A firm will maximise profit at a point where marginal rate of technical substitution is equal to…

Q: The additional cost of producing one more unit of output is calicu

A: A firms has fixed cost and variable cost. The total cost is the sum of fixed cost and variable cost.

Q: Suppose the production function for a product is given by q = 100KL. If the price of capital is $81…

A: Given:  Production Function : q=100KL Price of capital (r) = $81 per day Price of labor (w) = $27…

Q: What is the cheapest way of producing 850 units of output if a firm operates with the production…

A: It is given that;

Q: Determine whether each of the production functions below displays constant, increasing, or…

A: Answer in step 2.

Q: A firm produces according to the following production Function: Q= K^0.4L^0.5. MCK is $10 per K, and…

A: Returns to scale is the increase in production due to same unit increase in the inputs, labor and…

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.