Question Details

The following is a Cobb-Douglas production function 


Question 1
Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ____.
a.	marginal cost
b.	variable cost
c.	marginal rate of technical substitution
d.	total cost
Question 2
The marginal product is defined as:
a.	The ratio of total output to the amount of the variable input used in producing the output
b.	The incremental change in total output that can be produced by the use of one more unit of the variable input in the production process
c.	The percentage change in output resulting from a given percentage change in the amount
d.	The amount of fixed cost involved.
Question 3
The following is a Cobb-Douglas production function:  Q = 1.75K0.5∙L0.5.  What is correct here?
a.	A one-percent change in L will cause Q to change by one percent
b.	A one-percent change in K will cause Q to change by two percent
c.	This production function displays increasing returns to scale
d.	This production function displays constant returns to scale
e.	This production function displays decreasing returns to scale
Question 4
____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.
a.	Opportunity costs
b.	Marginal costs
c.	Relevant costs
d.	Sunk costs

Question 5
What method of inventory valuation should be used for economic decision-making problems?
a.	book value
b.	original cost
c.	current replacement cost
d.	cost or market, whichever is lower
e.	historical cost
Question 6
According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
a.	decreasing returns and declining average and marginal costs
b.	increasing returns and declining average and marginal costs
c.	increasing returns and increasing average and marginal costs
d.	decreasing returns and increasing average and marginal costs
Question 7
 If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is:
a.	10.2
b.	102
c.	37.1
d.	371
e.	321



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