6. The production function at Weedy's Grainery is Q = L¹4K¹/². If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.

6. The production function at Weedy's Grainery is Q = L¹4K¹/². If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 7TY

See similar textbooks

Similar questions

What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?
What is a long-run average cost curve?
Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
Give typing answer with explanation and conclusion
Please answer all parts get like please Hand written not allowed.
Assume that with 20L and 30K a given firm can produce 100 units of output and with 40L and 60K it can produce 175 units (where L and K denote the labor and capital inputs). Based on this information, we can conclude that: a. decreasing returns to scale exist. b. average cost is decreasing. c. average cost is constant. d. increasing returns to scale exist.
4. A firm has production function q = KL. The wage and rental rates are both 10. a. Does this production function exhibit increasing, decreasing, or constant returns to scale? Explain. b. The firm currently has 50 units of capital. What are its short run total cost (TC), marginal cost (MC), average variable cost (AVC), and average total cost (ATC) functions? Draw MC, AVC, and ATC on a well-labeled graph. Does this firm have a diminishing marginal product of labor? Explain. C.
These occur when doubling all of the inputs to a production process doubles the output. The shape of a firm's long-run average cost curve depends both on returns to scale in production and the effect of scale on the prices it pays for its inputs. O Decreasing returns to scale in production O Constrained optimisation problem O Constant returns to scale in production O Decreasing returns to scale
(1) Use the graph to answer the question. Between points C and D, the long-run average total cost curve is characterized by ________ because the firm is experiencing ________ returns to scale. A-constant returns; constant. B-economies of scale; increasing. C-economies of scale; constant D-diseconomies of scale; increasing. E-diseconomies of scale; decreasing The graph is attached on the following (2) If a firm is operating at a point on its long-run average total cost curve where the slope is negative, it is A-experiencing increasing returns to scale. B-experiencing constant returns to scale C-experiencing decreasing returns to scale. D-achieving efficient scale. E-making progressively less as it increases its inputs (3) If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true? A-Average total cost < price; marginal cost = marginal revenue B-Average total cost > price; marginal cost = marginal revenue C-Average…
20 15 LRAC 10 10 15 20 25 30 Quantity (units per hour) 1. In the above figure, the long run average cost LRAC, between 0 and 10 units per hour what does the firm exhibit (Economies of scale, Diseconomies of scale or constant return to scale)? 2. In the above figure, the long run average cost LRAC, between 10 and 20 units per hour what does the firm exhibit (Economies of scale, Diseconomies of scale or constant return to scale)? 3. In the above figure , the long run average cost LRAC, between 20 and 30 units per hour what does the firm exhibit (Economies of scale, Diseconomies of scale or constant return to scale)? В I Cost (dollars per unit)