A firm is currently producing1140 units of output according to the production function q = L4/3K1/2 and faces input prices equal to w = $20 and r = $80. In the short run, capital is fixed at 5 units. In the long run, the firm's costs are
A) lower because the firm substitutes towards more labor and away from capital.
B) lower because the firm substitutes towards more capital and away from labor.
C) higher because the firm substitutes towards more labor and away from capital.
D) higher because the firm substitutes towards more capital and away from labor.
B
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The most common form of business organization in the United States is the
A) proprietorship. B) partnership. C) corporation. D) cooperative.
Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:
A. supply has decreased and equilibrium price has increased. B. demand has increased and equilibrium price has decreased. C. demand has increased and equilibrium price has increased. D. demand has decreased and equilibrium price has decreased.