DBA 7180 UNIT 2 ASSESSMENT

DBA 7180 UNIT 2 ASSESSMENT

Assume the demand function for skin care products is given by Q = 1,000 – 20 P + 5I. If P=$25 and I=$1,000 currently, then:

The Marginal Product curve of input Y shows:

Sales of shampoo by CleanHair, Inc. have recently decreased from 1,300 to 1,100 units in response to a price decrease from $7 to $5 by its main competitor. Assuming that everything else is being held constant, we can infer that:

Assume the generic production function Q=f(K,L) displays both decreasing returns to capital (K) and decreasing returns to labor (L), then:

Let EdGI refer to the income elasticity for gasoline. Suppose EdGI= 2; this means that:

Assume your company produces good X using only two inputs, capital (K) and labor (L). Also, assume L is measured on the vertical axis and K on the horizontal axis. If the prices of inputs are PK=$30 and PL=15 and your company is behaving efficiently, what is the slope of the isoquant at the current input mix?

If a company has significant economies of scale in the long run — assuming a large market — the company will tend to:

BrightLight Ltd. estimates the demand curve for its table lamps to be Q = 1,000 – 4 P. That is, P = 250- .25Q. Which of the following is false?

A production with the form Q = 40 L.75 K.20 will have __________ in the long run.

If the generic production function Q=f(K,L) displays increasing returns to scale, the value of K is fixed in the short-run and the prices of all inputs are held constant, then:

For many corporations, a major portion of the cost of production is fixed in the short run. Should these very large fixed costs be ignored when the executives are making output and pricing decisions? Why?

In the small town of Springfield, Duffman observes that the price of beer has fallen. Duffman concludes that the total amount of money spent buying beer has to fall since the price of beer is lower. Is he correct? Why or why not? Clearly explain your answer.