If Cobb-Douglas production function is homogeneous of degree greater than one (n>1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
Correct Answer :
B. Increasing returns to scale
The increasing returns to scale means if we doubled the inputs, the output will more than doubled.}
Related Questions
In the modern theory of costs, the level of production which the firm considers feasible is known as:
Input factor
Heavy factor
Output factor
Load factor
For a few products such as insulin for diabetics,:
The demand curve can be upward sloping
The price elasticity of demand could be zero
The price elasticity of demand could be greater than one
None of the above
In short run, a firm can change its:
Total production
Fixed production
Variable production
None of the above
Income-elasticity of demand is expressed as:
% change in quantity demanded % change in income
% change in income % change in quantity demanded
Change in income Change in quantity demanded
None of the above
The difference between the average total cost and average variable cost as output increases will:
Increases
Remains the same
Diminishes
Zero
In case of short-run, the supply curve of an industry is the horizontal summation of:
Marginal cost curves
Average cost curves
Total cost curves
None of the above
Supply curves are most elastic:
In the long-run
In the short-run
For luxuries
In the immediate-run
When with a change in price the total outlay (expenditures) on a commodity remains constant, it is a case of:
Perfect elasticity (infinitely elastic)
Perfect inelasticity (zero elasticity)
Unit elasticity
Zero elasticity (infinitely inelastic)
Moving along an indifference curve leaves the consumer:
Better off
Worse off
Neither better nor worse off
None of the above
Perfect competition implies:
Differentiated goods
Homogeneous goods
Advertised goods
Distress sale of goods
According to Saint Thomas Aquinas value is determined by God, but prices by:
Consumers
Employees
People
Labor
If the demand for good is less elastic and government levied a tax per unit of output, the price per unit for the firm would:
Rise by the amount of the tax
Rise by more than the amount of the tax
Rise by less than the amount of the tax
Remain the same
The long run total cost is attained by:
LMC.Q
AC.Q
LC.Q
LAC.Q
If Cobb-Douglas production function is homogeneous of degree less than one (n<1), then it shows:
Constant returns to scale
Increasing returns to scale
Decreasing returns to scale
None of the above
The average product is given as:
Q.L
Q- L
Q+ L
Q/L
When elasticity of demand is greater than one (e >1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
If a firm produces zero output in the short period then which statement is true?
Its total cost will be zero
Its variable cost will be positive
Its fixed cost will be positive
Its average cost will be zero
The difference between laws of return and laws of return to scale is:
In case of laws of return, one factor of production is constant and other is variable while in laws of return to scale both factors of production are variable
In case of laws of return to scale, one factor of production is constant and other is variable while in laws of return, both factors of production are variable
Both a and b
None of the above
Average cost curve contains in it:
Normal profits
No normal profits
Sometimes normal profits and sometimes no normal profits
Super normal profits
The main objective of the firm is to:
Face losses
Avoid losses
Bear losses
Make economic decisions
In Revealed Preference Theory, a consumer reveals preference for bundle of:
Two goods
A few goods
One good
Many goods
According to translog production function, elasticity of substitution is:
Greater than one
Less than one
Zero
Equal to one
The proportionality rule in production requires that the ratios of MP and factor prices are:
Doubled
Equalized
Not equalized
None of the above
If a new production technology for producing compact discs is developed and new firms are attracted to this field:
The supply curve will shift down or right
The supply curve will shift up or left
Both demand and supply curve shifts would occur
None of the above
In monopolistic competition, the firm take advantage due to customers:
Similar choices
Unlimited choices
Differential choices
Few choices
If the commodity is normal then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
The cobweb model will convergent when the slope of:
Demand curve is more than supply curve
Supply curve is more than demand curve
Supply curve is equal to demand curve
None of the above
If the demand for good is more elastic and government levied a tax per unit of output, the price per unit for the firm would:
Rise by the amount of the tax
Rise by more than the amount of the tax
Rise by less than the amount of the tax
Remain the same
An exceptional demand curve is:
Downward sloping
Upward sloping
Horizontal straight line
Vertical straight line
The utility function u = f(x) is based upon :
Two goods
Few goods
One good
Zero goods