2. A firm has the production function fx, y)-X/4 yi/4, where X is the amount of

Question

2. A firm has the production function fx, y)-X/4 yi/4, where X is the amount of factor x used and Y he vertical is the amount of factor y used. On a diagram we put X on the horizontal axis and Y on t axis. We draw some isoquants. Now we draw a straight line on the graph and we notice that wherever this line meets an isoquant, the isoquant has a slope of -9. The straight line we drew a. is horizontal. b. is a ray through the origin with slope 3. c. is vertical. d. is a ray through the origin with slope 4. e. has a negative slope. 3. A firm uses 3 factors to produce its output. Its production function is f(x, y, z) = minpe/y, 2t-xly. If the amount of each input is multiplied by 3, its output will be multiplied by a. 27 d. 0.30 e. The answer depends on the original choice of x, y, and z

Explanation / Answer

2) ans is E. The straight line we draw is isocost line which always have negative slope.

3)ans is B. Since production function is homogenous of degree 2 which makes increasing return to scale and thus output increased by 9 times.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.