A Production Function of the Form Q = AL^bK^c

question 35

Multiple Choice

A production function of the form Q = aL^bK^c:

• A)implies constant marginal products for the inputs.
• B)implies constant average products for the inputs.
• C)incorporates the assumption of diminishing returns to the inputs.
• D)cannot imply diminishing returns to the inputs.

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Definitions:

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or sold but not yet paid for.

Sales on Account

Transactions where goods or services are sold with the understanding that payment will be made at a later date.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations on outstanding debt from its operating income.

Average Sale Period

The average time it takes for a company to sell its inventory, calculated over a specific time frame.