question

b. the marginal products of the inputs are assumed constant.

answer

A linear specification, Q = aK + bL, is not appropriate for estimating a production function because

a. it does not allow the firm to substitute capital for labor.

b. the marginal products of the inputs are assumed constant.

c. the firm could produce positive levels of output at zero cost.

d. both b and c

e. all of the above

a. it does not allow the firm to substitute capital for labor.

b. the marginal products of the inputs are assumed constant.

c. the firm could produce positive levels of output at zero cost.

d. both b and c

e. all of the above

question

a. the intercept term is forced to equal zero.

answer

When estimating a short-run production function of the form Q = AL³ + BL², it is necessary to specify in the computer routine that

a. the intercept term is forced to equal zero.

b. B > 0.

c. A < 0.

d. a and b

e. all of the above

a. the intercept term is forced to equal zero.

b. B > 0.

c. A < 0.

d. a and b

e. all of the above

question

40

answer

A short-run production function was estimated as

Q = −0.002L³ + 0.16L²

At what level of labor usage does the maximum average product occur?

Q = −0.002L³ + 0.16L²

At what level of labor usage does the maximum average product occur?

question

$40

answer

The manager of Greene Enterprises, Inc., recently estimated its average variable cost (AVC) function to be

AVC = 88 - 0.026Q + 0.000003Q²

Greene Enterprises faces total fixed costs (TFC) of $300,000. When Greene Enterprises produces 6,000 units, average variable cost (AVC) is ________.

AVC = 88 - 0.026Q + 0.000003Q²

Greene Enterprises faces total fixed costs (TFC) of $300,000. When Greene Enterprises produces 6,000 units, average variable cost (AVC) is ________.

question

b. a short-run cubic production function.

answer

The empirical specification Q = AL³ + BL³ can be used to estimate

a. a family of U-shaped product curves.

b. a short-run cubic production function.

c. short-run cubic cost function.

d. both a and c

e. none of the above

a. a family of U-shaped product curves.

b. a short-run cubic production function.

c. short-run cubic cost function.

d. both a and c

e. none of the above

question

e. a and d

answer

A short-run marginal cost function is estimated as SMC = 96 - 4Q + 0.15Q². Which of the following cost functions is associated with this estimated SMC equation?

a. SMC = 96 -- 4Q + 0.1Q²

b. TVC = 96Q - 2Q² + 0.05Q³

c. TVC = 96Q + 4Q² + 0.15Q³

d. AVC = 96 - 2Q + 0.05Q²

e. a and d

a. SMC = 96 -- 4Q + 0.1Q²

b. TVC = 96Q - 2Q² + 0.05Q³

c. TVC = 96Q + 4Q² + 0.15Q³

d. AVC = 96 - 2Q + 0.05Q²

e. a and d

question

d. both a and b

answer

When estimating a cubic short-run production function Q = AL³ + BL² using linear regression analysis, you must

a. suppress the intercept term (regress through the origin).

b. transform the equation into linear form by defining L3 and L2

as L3 and L2, respectively.

c. convert the right-hand-side variables to logarithms.

d. both a and b

e. both b and c

a. suppress the intercept term (regress through the origin).

b. transform the equation into linear form by defining L3 and L2

as L3 and L2, respectively.

c. convert the right-hand-side variables to logarithms.

d. both a and b

e. both b and c

question

$117.40

answer

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. If Straker Industries produces 20 units of output, what is estimated average total cost (ATC)?

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. If Straker Industries produces 20 units of output, what is estimated average total cost (ATC)?

question

$38.60

answer

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. If Straker Industries produces 12 units of output, what is estimated average variable cost (AVC)?

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. If Straker Industries produces 12 units of output, what is estimated average variable cost (AVC)?

question

$33.60

answer

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. At Straker Industries, average variable cost (AVC) reaches its minimum value at ________.

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. At Straker Industries, average variable cost (AVC) reaches its minimum value at ________.

question

$100

answer

The manager of Greene Enterprises, Inc., recently estimated its average variable

cost (AVC) function to be

AVC = 88 - 0.026Q + 0.000003Q²

Greene Enterprises faces total fixed costs (TFC) of $300,000. If Greene Enterprises produces 6,000 units of output, what is estimated short-run marginal cost (SMC)?

cost (AVC) function to be

AVC = 88 - 0.026Q + 0.000003Q²

Greene Enterprises faces total fixed costs (TFC) of $300,000. If Greene Enterprises produces 6,000 units of output, what is estimated short-run marginal cost (SMC)?

question

$2,348

answer

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. If Straker Industries produces 20 units of output, what is estimated total cost (TC)?

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000. If Straker Industries produces 20 units of output, what is estimated total cost (TC)?

question

c. a < 0, b > 0

answer

With a cubic production function of the form Q = aK³L³ + bK²L², in order for the average and marginal product functions to have their usual theoretical properties, it must be the case that

a. a < 0, b < 0

b. a > 0, b < 0

c. a < 0, b > 0

d. a > 0, b > 0

a. a < 0, b < 0

b. a > 0, b < 0

c. a < 0, b > 0

d. a > 0, b > 0

question

e. both a and c

answer

A firm estimates its long-run production function to be Q = -0.0075K³L³ + 12K²L²

Suppose the firm employs 12 units of capital. The product curve(s) in the short-run are

a. MP = -38.88 L2 + 3,456L.

b. AP = -12.96 L3 + 1,728L2.

c. TP = -12.96 L3 + 1,728L2.

d. both a and b

e. both a and c

Suppose the firm employs 12 units of capital. The product curve(s) in the short-run are

a. MP = -38.88 L2 + 3,456L.

b. AP = -12.96 L3 + 1,728L2.

c. TP = -12.96 L3 + 1,728L2.

d. both a and b

e. both a and c

question

b. SMC = 43.4 − 5.6Q + 0.6Q²

answer

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000.

The estimated short-run marginal cost function (SMC) at Straker Industries is:

a. SMC = 43.4 − 1.4Q + 0.07Q²

b. SMC = 43.4 − 5.6Q + 0.6Q²

c. SMC = 43.4Q − 5.6Q² + 0.6Q³ d. SMC = 43.4Q − 1.4Q² + 0.07Q³

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is

$1,000.

The estimated short-run marginal cost function (SMC) at Straker Industries is:

a. SMC = 43.4 − 1.4Q + 0.07Q²

b. SMC = 43.4 − 5.6Q + 0.6Q²

c. SMC = 43.4Q − 5.6Q² + 0.6Q³ d. SMC = 43.4Q − 1.4Q² + 0.07Q³

question

d. Q=AL³+BL²(whereA=aK³,B=bK²)

answer

Which of the following represents a short-run cubic production function?

a. Q=AL²+BL(whereA=aK³,B=bK²)

b. Q = aK³L³ + bK²L²

c. Q=3AL²+2BL(whereA=aK³,B=bK²)

d. Q=AL³+BL²(whereA=aK³,B=bK²) e. all of the above

a. Q=AL²+BL(whereA=aK³,B=bK²)

b. Q = aK³L³ + bK²L²

c. Q=3AL²+2BL(whereA=aK³,B=bK²)

d. Q=AL³+BL²(whereA=aK³,B=bK²) e. all of the above

question

30,672

answer

A firm estimates its long-run production function to be Q = -0.0075K³L³ + 12K²L²

Suppose the firm employs 12 units of capital. Marginal product when 10 units of labor are employed is

Suppose the firm employs 12 units of capital. Marginal product when 10 units of labor are employed is

question

4

answer

A short-run production function was estimated as

Q = −0.002L³ + 0.16L²

At 20 units of labor, what is marginal product?

Q = −0.002L³ + 0.16L²

At 20 units of labor, what is marginal product?

question

$1,348

answer

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000. If Straker Industries produces 20 units of output, what is estimated total variable cost (TVC)?

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000. If Straker Industries produces 20 units of output, what is estimated total variable cost (TVC)?

question

a. Q = aK³L³ + bK²L²

answer

Which of the following is an estimable form of a production function?

a. Q = aK³L³ + bK²L²

b. Q = f(L,K)

c. Q = f(L,Kbar)

d. all of the above

e. none of the above

a. Q = aK³L³ + bK²L²

b. Q = f(L,K)

c. Q = f(L,Kbar)

d. all of the above

e. none of the above