Assess whether the following statements are true or false. Do not forget to motivate your answer....

Assess whether the following statements are true or false. Do not forget to motivate your answer.

(a)Suppose that when the price of labor is l = 10 and the price of capital is c = 5, then the minimum cost of producing 10 units of output is 200 dollars. Claim: If the price of labor drops to l = 8, then the minimum cost of producing 10 units will be strictly below 200 dollars (that is, less than 200, not equal to 200)

(b)Claim: If a production function has diminishing marginal product of labor and diminishing marginal product of capital, then that production function cannot have increasing returns to scale.

Solutions

Expert Solution

True ! Since all the inputs entered in the production function have diminishing returns ( increase in one unit of a input , reduce the output ) then together we cannot have increasing returns to scale. Increasing both the inputs together will decrease the overall output

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Assess whether the following statements are true or false. motivate your answer (your argument should in...

Assess whether the following statements are true or false. motivate your answer (your argument should in principle prove the claim or prove it wrong). (1)Claim: As a firm output goal Q increases, a cost-minimizing firm will always use more labor and more capital to achieve the output goal. (2)Claim: If a production function has diminishing marginal product of labor and diminishing marginal product of capital, then that production function cannot have increasing returns to scale.

Indicate whether the following statements are TRUE or FALSE and explain your answer fully with an...

Indicate whether the following statements are TRUE or FALSE and explain your answer fully with an adequate explanation a)An efficient outcome is desirable because it allows us to make Pareto improvements. b)Unlike a consumer, a firm does not face a budget constraint. c)If the wage rate increases, then those who work have a stronger incentive to supply labor.

a) Indicate whether the following statements are true or false. Provide an explanation for your answer:...

a) Indicate whether the following statements are true or false. Provide an explanation for your answer: i. The most important role of money is to serve as a store of value. ii. An increase in the money supply will shift the AD curve upwards and to the left. iii. Rising output coupled with falling prices is called stagflation. iv. A cut in taxes will shift the aggregate demand curve upwards and to the right. v. Free trade is based on...

Indicate whether each of the following statements is true, false, or uncertain, and explain your answer...

Indicate whether each of the following statements is true, false, or uncertain, and explain your answer in great detail. If a word or phrase is italicized and bolded your answer must include a concise definition of the word or phrase. You must include graphs when necessary. How does an economy get out of a recessionary gap? (use a graph.)

Indicate whether the following statements are true or false. Why or why not? Explain your answer...

Indicate whether the following statements are true or false. Why or why not? Explain your answer clearly and concisely. a. [5 points] The fact that health and income are positively correlated suggests that a policy of transferring income from the wealthy to the poor will increase overall health in society. b. [5 points] The concept of need in health care derives from the presence of externalities in healthcare markets.

Indicate whether the following statements are true or false. Provide an explanation for your answer: i....

Indicate whether the following statements are true or false. Provide an explanation for your answer: i. In a perfectly competitive market an increase in demand for a product may increase prices in the short run but not in the long run. ii. The "invisible hand" is a metaphor for how societies create laws to regulate what and how things are produced in an economy. iii. The opportunity cost of an item or an action is always equal to the amount...

Indicate whether the following statements are TRUE or FALSE and explain your answer fully, but succinctly....

Indicate whether the following statements are TRUE or FALSE and explain your answer fully, but succinctly. Without an adequate explanation, you will get no credit. a)An efficient outcome is desirable because it allows us to make Pareto improvements. b)Unlike a consumer, a firm does not face a budget constraint. c)If the wage rate increases, then those who work have a stronger incentive to supply labor.

Determine whether the following statements are true or false , and justify your answer 1- Given...

Determine whether the following statements are true or false , and justify your answer 1- Given that accounting information is a public good , we have to have mandatory accounting regulation. 2- It is better to lobby the accounting standard - setter indirectly rather than directly. 3- A change in reported income is an economic consequence of a change in an accounting standard's requirements PLEASE JUSTIFY EVEN IF YES

Indicate whether the following statements are True or False and explain your answer. 1. The strong...

Indicate whether the following statements are True or False and explain your answer. 1. The strong form of the efficient markets hypothesis (EMH) states that even an investor armed with both public and insider information cannot consistently earn superior returns. 2. Investment banks generally specialize in lending money whereas commercial banks typically help companies raise capital from other parties. 3. A negotiable certificate of deposit would be considered an example of a capital market instrument. 4. You notify your broker...

Indicate whether each of the following statements are true, false, or uncertain and explain your answer....

Indicate whether each of the following statements are true, false, or uncertain and explain your answer. a. Consider two zero-coupon bonds, one with a short maturity, and one with a longer maturity. The value of the long-maturity bond is more sensitive (in % terms) to changes in interest rates than the short-maturity bond' s value. b. If the Internal Rate of Return (IRR) of an investment project is above its cost of capital, then the NPV of the project (calculated...

Subjects