Answer Happy

5. Consider the following set of data that looks at how output changes following changes in inputs. (3 marks) Quantity of Labour Quantity of Capital Output 0 5 0 10 10 100 20 15 250 30 20 450 40 575 50 30 650 25 Which of the following statements accurately describes what this data shows? (a) The firm experiences increasing returns to scale at all levels of output. (b) The firm experiences first increasing returns to scale and then runs into decreasing returns to scale. (c) The firm experiences first decreasing returns to scale and then increasing returns to scale. (d) The firm experiences increasing marginal returns to labour and increasing marginal returns to capital at all levels of output.
6. Suppose a firm is currently producing at point A on the diagram below. (3 marks) Costs LRAC A O Output This might indicate that: (a) The firm is experiencing economies of scope. (b) The firm is producing at the minimum efficient scale. (c) The firm is producing allocatively efficiently. (d) The firm is experiencing problems of control and coordination.
7. Consider a firm that has a total cost function that increases linearly with output and consequently the firm experiences constant marginal cost. Assuming that total cost is denoted TC and that a, b are constants, which of the following could be the firm's total cost function? (3 marks) = - (a) TC = a +bQ+bQ3 (b) TC = a + bQ - Q2 (c) TC = a +bQ (d) TC = a-bQ =