1. Assume your company produces good X using only two inputs, capital (K)) and labor (L). Also, assume L is measured on the vertical axis and K on the horizontal axis. if the price of inputs are PK+$30 and PL=15 and your company is behaving efficiently, what is the slope of the isoquant at the current input mix?
( 2)
( 1/2)
2
1/2
2. A production with the form Q=40 L.75K.20 will have ___________in the long run.
increasing returns to scale
decreasing returns to scale
constant returns to scale
diminishing returns to the variable input
3. If a company has significant economies of scale in the long run**assuming a large market**the company will tend to
grow larger and have a declining average cost curve
become small and have a declining average cost curve
grow larger and have raising average cost curve
become smaller and have a rising average cost curve