Ouestion 01. A firm s marginal revenue is defined as a. The ratio of total reven

Question

Ouestion 01. A firm s marginal revenue is defined as a. The ratio of total revenue to total quantity produced b. The additional output produced by lowering price. c. The additional revenue received due to a technological innovation d. The additional revenue received by producing one additional unit of output. Ouestion 02. A firm's isoquant shows a. The various combinations of inputs that will result in a given level of cost. b. The amount of capital needed to produce a given level of output with labor held constant. The various combinations of capital and labor that will produce a given amount of output. d. c. None of the above. Ouestion 03. Which of the following production functions exhibits constant returns to scale? (Hint: use t > 1) a, f(k,l) = 3k + 21 b. f(k.l) - k07104 c, d. f(k,l) = k2 + 10.5 None of the above.

Explanation / Answer

Part 1) A firm’s marginal revenue is defined as the additional revenue received by producing one additional unit of output. So, option d is correct.

Part 2) A firm’s isoquant shows the various combinations of capital and labor that will produce a given amount of output. So, option c is correct.

Part 3) For constant returns to scale the coefficients of K and L should add to 1. Since, in none of the production function the coefficients add to 1.

So, option d is correct.

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