s positive. the above. 13.The cost-output elasticity equals 1.4. This implies th
ID: 1134608 • Letter: S
Question
s positive. the above. 13.The cost-output elasticity equals 1.4. This implies that: (1) A) th By there are economies of scale. C) there are diseconomies of scale. D) marginal cost is less than average cost. neither economies nor diseconomies of scale. ere are 14.Use he ae the following statements to answer this question: (1) ong-run average cost curve is the envelope of the short-run average The long-run marginal cost curve is the envelope of the short-run margina I. The l cost curves. II. cost curves. A) Fand II are true. By I is true and II is false C) II is true and I is false. D) I and II are false. 15. If the isoquants are straight lines, then (1) A) ipputs have fixed costs at all use rates. Bythe marginal rate of technical substitution of inputs is constant. C) only one combination of inputs is possible. D) there are constant returns to scale.Explanation / Answer
At Chegg we try to help student and solve your queries. Do give a thumbs up for the answer and the efforts put in.
Answer 13. The cost output elasticity equals 1.4 and this will imply that (c) there are dis-economies of scale. The reason being that when the cost output elasticity cannot be greater than 1 to imply that there are economies of scale.
However in our case we have the ratio to be 1.4 and this clearly implies that the value is more than 1 creating a diseconomies of scale. This situation is more present in manufacturing and mining companies. In the same way we cannot comment whether the marginal cost is less or more than AC and that is why other option are incorrect
Answer 14. The long run average cost curve is the envelope of the short run average cost curves.-True
The long run marginal cost curve is the envelope of the short run marginal cost curve.-False
Explanation- The Long-run marginal cost equals short run marginal-cost at the least-long-run-average-cost level of production. LRMC is the slope of the LR total-cost function.
However the U-shaped LRAC curve is an envelope curve that surrounds the various short-run ATC curves. This means that the LRAC will encircle the short run AC curve, however the same is not true for Long run MC curve. Therefore option B is the correct option
Answer 15. If the isoquants are the straight line then (B) the marginal rate of technical substitution of inputs is constant. explanantion- as we already know that the isoquants of a production function for which the inputs are perfect substitutes are straight lines. Due to this the MRTS will remain constant making it equal to the slope of the lines. The reason why this happens to be a straight line is that the inputs used in the production function can be replaced with the other available substitutes and hence making MRTS constant. This nature of isoquant will make them constant.
Also we cannot say that one combination is possible or not because the substitutes can vary in number also they cannot be constant in number and returns to scale.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.