A Firm's Production Function Is Given by Q = Min{M

question 19

Multiple Choice

A firm's production function is given by q = min{M, }, where M is the number of machines and L is the amount of labor that it uses. The price of labor is $1and the price of machines is $4 per unit. The firm's long-run marginal cost curve is

• A) upward sloping and gets flatter as Q increases.
• B) a straight line with slope 2.
• C) a straight line with slope 1.
• D) upward sloping and gets steeper as Q increases.
• E) a straight line with slope 4.

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Definitions:

Cash Payback Methods

A technique used to estimate the profitability of an investment by calculating the time needed to recoup the initial investment from the cash flows generated by that investment.

Capital Investment Proposals

Suggestions for strategic investments in long-term assets, projects, or ventures aimed at enhancing a company's growth and profitability.

Fixed Asset

Long-term tangible property that a firm owns and uses in its operations to generate income, not expected to be consumed or converted into cash in the short term.

Useful Life

An estimate of the lifespan of an asset during which it is expected to remain productive or useful for the purposes it was acquired.