Tute7_2016 - ECON3101 Microeconomics 3 Tutorial 7...

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ECON3101 Microeconomics 3 Tutorial 7 1 Production functions and cost functions Multiple choice 1. Suppose the production function for good q is given by 3 2 q k l = + where k and l are capital and labor inputs. Consider three statements about this function: I. The function exhibits constant returns to scale. II. The function exhibits diminishing marginal productivities to all inputs. III. The function has a constant rate of technical substitution. Which of these statements is true? a. All of them. b. None of them. c. I and II but not III. d. I and III but not II. e. Only I. 2. The production function q = kl a. exhibits constant returns to scale and constant marginal productivities for k and l . b. exhibits diminishing returns to scale and diminishing marginal productivities for k and l . c. exhibits constant returns to scale and diminishing marginal productivities for k and l . d. exhibits diminishing returns to scale and constant marginal productivities for k and l .
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