Suppose the production function for coffee (C) is C = min(B,W) where B = beans in kilos and W = water in liters and the price of water is €0.10 per liter and the price of beans is €10 per kilo. The cost minimizing combination of beans and water for C = 200 is
B = 200, W = 2000
B = 2000, W = 200
B = 100, W = 100
B = 200, W = 200
Suppose the production function for coffee (C) is C = min(B,W) where B = beans in kilos and W = water in liters and the price of water is €0.10 per liter and the price of beans is €10 per kilo. The expansion path is
B = 10W
B = 0.1W
B = W
-10 = B + W
Suppose the production function for coffee (C) is C = min(B,W) where B = beans in kilos and W = water in liters and the price of water is €0.10 per liter and the price of beans is €10 per kilo. The expansion path
depends on the price of beans only.
depends on the price of water only
depends on the price of neither beans nor water.
Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. If the price of corn feed is €4 and the price of soybean feed is €5, what is the cost minimizing combination of producing P = 200?
C = 100
S = 40
C = 50, S = 20
C = 20, S = 50
Suppose a firm owns two plants making whirlygigs, both with diminishing returns. One in China and one in the U.S. The wage in the U.S. is double that of China but for a given level of output, U.S. workers are more (but not twice as) productive. Both plants are of equal fixed size. The firm will
produce more in the U.S. than China but some in each.
produce more in the China than the U.S. but some in each.
produce only in the U.S.
produce in both countries, but whether production is greater in the U.S. or China depends on demand.
The opportunity cost of producing a bicycle refers to
the out-of-pocket payments made to produce the bicycle.
the value of the goods that were given up to produce the bicycle.
the bicycle’s retail price.
the marginal cost of the last bicycle produced.
The accountant’s cost of producing a bicycle refers to
the out-of-pocket payments made to produce the bicycle.
the value of the goods that were given up to produce the bicycle.
the bicycle’s retail price.
the marginal cost of the last bicycle produced.
A firm’s economic profits are given by
total revenue minus total accounting cost.
the owner’s opportunity cost.
total revenue minus total economic cost.
total revenue minus the cost of capital.
The expansion path for a constant returns to scale production function
is a straight line through the origin with a slope greater than one if w > v.
is a straight line through the origin with a slope less than one if w < v.
is a straight line through the origin though its slope cannot be determined by w and v alone.
has a positive slope but is not necessarily a straight line.
A firm’s marginal cost is defined as
the ratio of total cost to total output.
the ratio of total output to total cost.
the additional cost of producing one more unit of output.