1.Which of the following indicates when Stage I ends and Stage II begins in the
ID: 1108232 • Letter: 1
Question
1.Which of the following indicates when Stage I ends and Stage II begins in the short-run production?
a. when AP = 0
b. when MP = 0
c. when MP starts to diminish
d. when MP = AP
2.Which of the following indicates when Stage II ends and Stage III begins in the short-run production function?
a. when AP = 0
b. when MP = AP
c. when MP = 0
d. when MP starts to diminish
3.Which of the following is not one of the strengths of the Cobb-Douglas production function?
a. It can be converted into a linear function for ease of calculation.
b. It shows a production function passing through increasing returns to constant returns and then to decreasing returns.
c. Both marginal product and returns to scale can be estimated from it.
d. The sum of the exponents indicates whether returns to scale are increasing, constant or decreasing.
4. Which of the following is not true about the law of diminishing returns?
a. It divides Stage I and II of the production process.
b. It will have an impact on the firm's marginal cost.
c. All of the above are true.
d. It refers to diminishing marginal product.
e. It is a short-run phenomenon.
5. Which of the following statements best represents a difference between short-run and long-run cost?
a. All of the above are true.
b. In the short-run labor must always be considered the variable input and capital the fixed input.
c. Less than one year is considered the short run; more than one year the long run.
d. There are no fixed costs in the long run.
Explanation / Answer
1> d. when MP = AP
Stage I - The total product curve has a positive slope. - Marginal product is greater than average product. Marginal product initially increases, the decreases until it is equal to the average product at the end of Stage I. - the Average product is positive and the average product curve has a positive slope.
2> c. when MP = 0
Stage II - The total product curve has a decreasing positive slope. In other words, the slope becomes atter with each additional unit of variable input. - Marginal product is positive and the marginal product curve has a negative slope. The marginal product curve intersects the horizontal quantity axis at the end of Stage II
3> b. It shows a production function passing through increasing returns to constant returns and then to decreasing returns.
In Cobb-Douglas production, the return to scale depends on the sum of the exponents.
4> a. It divides Stage I and II of the production process.
It is independent of the scale.
5> a. All of the above are true.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.