Which of the following conditions is true when s producer minimizes the cost of

Question

Which of the following conditions is true when s producer minimizes the cost of producing a given level of output? O The marginal product per dollar spent on an inputs is equal. The MRTS is equal to the ratio of the quantity of inputs. The marginal products of all inputs are equal The marginal product per dollar spent on all inputs is equal and the MRTS is equal to the ratio of the quantity of inputs. If output is produced according to Q = K^1/2 + 3L^1/2, then this production process exhibits: a. first decreasing and then increasing returns to scale b. decreasing returns to scale c. increasing returns to scale d. constant returns to scale e. first increasing and then decreasing returns to scale

Explanation / Answer

Answer )

Q.8)  the marginal product per dollar spent on all inputs is equal and The MRTS is equal to the ratio of input prices.

A cost-minimizing input bundle is a point on the isoquant for the given y that is on the lowest possible isocost line.with smooth isoquants convex to the origin, So the condition that the MRTS be equal to the input cost ratio is equivalent to the condition that the marginal product per dollar is equal for the two inputs.

Q.9) d.) constant returns to scale.

since + = 1,the production function has constant returns to scale, meaning that doubling the usage of capital K and labor L will also double output Y.

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