Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. Which of the following statements is TRUE?
A) The production function has decreasing returns to scale.
B) The production function has increasing returns to scale.
C) The production function has constant returns to scale.
D) Returns to scale vary with the level of output.
A
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Suppose that in a free market 2,000 patients purchase an operation to receive an artificial heart at a price of $500,000 per operation. Without the heart, each patient will die. The government decides this price is too high and imposes a maximum price of $200,000 . Everything else equal,
a. more patients will now die. b. fewer patients will now die. c. more patients will now die only if the demand curve is vertical. d. more patients will now die only if the demand curve is horizontal.
Which of the following causes the demand for veggie-burgers to increase?
a. A technological innovation that lowers the cost of producing veggie burgers. b. An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers. c. An increase in the price of burger buns. d. A decline in the price of veggie burgers.