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

question 30

Multiple Choice

A firm's production function is given by q = min{M, L^1/2}, 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 $2 per unit.The firm's long-run marginal cost curve is

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

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Definitions:

Investment Opportunity

An option to invest capital with the expectation of achieving a financial return.

Delivery Cycle Time

The total time taken from the receipt of a customer order to the delivery of the product, indicating the efficiency of the entire supply chain process.

Residual Income

The income that remains after deducting all costs, including opportunity costs, from business operations or investments.

Consumer Products Division

A segment of a company that focuses on producing and selling goods directly to consumers rather than businesses or other organizations.