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The production function Q =0.25X0.5 Y exhibits:
constant returns to scale.
increasing returns to scale.
increasing and then diminishing returns to scale.
diminishing returns to scale.
The law of diminishing returns:
deals specifically with the diminishing marginal product of fixed input factors.
states that the marginal product of a variable factor must eventually decline as
increasingly more is employed.
can be derived deductively.
states that as the quantity of a variable input increases, with the quantities of all
other factors being held constant, the resulting output must eventually diminish.
A new production function results following:
a new wage agreement following collective bargaining.
a surge in product demand.
a decrease in the availability of needed inputs.
the successful completion of a training program that enhances worker productivity.
The relation between output and the variation in all inputs taken together is the:
factor productivity of a production system.
law of diminishing returns.
returns to scale characteristic of a production system.
returns to factor characteristic of a production system.
When PX = $100 , MPX = 10 and MRQ = $5 , the marginal revenue product of X
equals:
$100
$50
$10
$5
The returns to scale characteristic of a production system:
is measured by the way in which inputs can be varied in an unbroken marginal
fashion rather than incrementally.
illustrates the distinct, or "lumpy," pattern of input combination.
shows the relation between output and the variation in all inputs.
is the relation between output and variation in only one of the inputs employed.
The marginal product concept is:
used to describe the relation between output and variation in all inputs in a
production function.
the change in output associated with a one-unit change in an individual factor.
total product divided by the number input units employed.
the complete output from a production system
Restaurant Marketing Services, Inc., offers affinity card marketing and monitoring
systems to fine dining establishments nationwide. Fixed costs are $600,000 per year.
Sponsoring restaurants are paid $60 for each card sold, and card printing and
distribution costs are $3 per card. This means that RMS's marginal costs are $63 per
card. Based on recent sales experience, the estimated demand curve and marginal
revenue relations for are: (16%)
P = $130 − $0.000125Q
MR (marginal revenue) = $130 − $0.00025Q
In the IS-LM framework and the AD-AS framework, discuss verbally and graphically
the effects of successive decreases in the discount rate on the money market and the
entire economy with a stagflation taking place as a result of inceases in the world prices
of energy inputs. (25%)
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