Quizzes - BrainMass

1

If output expands at an increasing rate, cost will increase

at an increasing rate

at a constant rate

at a diminishing rate

2

When returns to scale are decreasing,

Percentage change in input is greater than the percent change in the output.

Cost per unit will rise

The elasticity of output is less than 1

All of the above

3

As output expands, in a graph, the AVC and the ATC

Remain parallel

Get closer

Do not change

Are equal

4

If the sum of the exponents of the inputs in a Cobb Douglas production function exceed 1, returns to scale are:

Constant

Decreasing

Increasing

Unknown

5

Assume labor costs are 40% of unit cost. If labor cost increases from $10 to $15, all else remaining equal, the unit cost will:

Rise by 50%

Increase by 40%

Not be affected

Will rise by 20%.

Production and cost theory