Question 04. (4 Points) WayneCorp produces a new high nutrient fertilizer based
ID: 1113663 • Letter: Q
Question
Question 04. (4 Points) WayneCorp produces a new high nutrient fertilizer based on guano, and uses only capital and labor in its production process. Suppose with a particular set of isoquants, as output expands the amount of l used in the production process decreases. Which of the following statements is true? (Hint: WayneCorp minimizes costs). A. Capital is a normal input. B. Labor is a normal input. C. Capital is an inferior input. D. WayneCorp would choose to shut down in the short run, but not exit the market. Question 05. (4 Points) Give n a production function with constant returns to scale, which of the following statements is true? A. Average cost always equals marginal cost. B. Marginal cost is always less than average cost. C. The average cost curve is u-shaped and marginal cost crosses average cost at its minimum value. D. None of the above.Explanation / Answer
4)Ans is A
Since labor decreases which means capital must have increased which makes capital a normal input
5) Ans is A
When there is constant return to scale then the Average cost=Marginal cost.