Chapter 21 T or F Flashcards
Quasi-fixed costs are those costs that can be avoided if and only if a firm produces zero output.
T
If there are increasing returns to scale, then average costs are a decreasing function of output.
T
If there are increasing returns to scale, then costs per unit of output decrease as you move downward and to the right along an isocost line.
F
If the production function is f(x1, x2) = min{x1, x2}, then the cost function is c(w1, w2, y) = min{w1, w2}y.
F
The conditional factor demand function for factor 1 is a function x1(w1, w2, y) that tells the ratio of price to output for an optimal factor choice of the firm.
F
The cost function c(w1, w2, y) expresses the cost per unit of output of producing y units of output if equal amounts of both factors are used.
F
A competitive, cost-minimizing firm has the production function f(x, y) = x + 2y and uses positive amounts of both inputs. If the price of x doubles and the price of y triples, then the cost of production will more than double.
F
The total cost function c(w1, w2, y) expresses the cost per unit of output as a function of input prices and output.
F
A firm uses a single variable input x to produce outputs according to the production function f(x) = 500x - 4x². This firm has fixed costs of $300. This firm’s short-run marginal cost curve lies below its short-run average variable cost curve for all positive values of x.
F
A firm uses a single variable input x to produce outputs according to the production function f(x) = 300x - 5x². This firm has fixed costs of $300. This firm’s short-run marginal cost curve lies below its short-run average variable cost curve for all positive values of x.
F
