If the Exponents in the Production Function Were 0

question 9

Multiple Choice

if the exponents in the production function were 0.30 for x₁ and 0.20 for x₂, this production function would exhibit (constant, increasing, decreasing) returns to scale and (would, would not) have diminishing technical rate of substitution.

• A)decreasing, would not
• B)constant, would not
• C)increasing, would
• D)constant, would
• E)decreasing, would

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Definitions:

Painting Department

A specific section within a manufacturing facility dedicated to the painting of products, often considered in costing for departmental overhead allocation.

FIFO Method

An inventory valuation technique where the first items placed in inventory are the first ones sold, standing for "First In, First Out."

Equivalent Unit

A concept in cost accounting used to allocate costs to partially completed units of product, treating them as an equivalent of a proportionate number of fully completed units.

Direct Materials

Raw materials directly used in the production of a product, easily traceable to the finished product.