Assume that with 20L and 30K a given firm can produce 100 units of output and with 40L and 60K it can produce 175 units (where L and K denote the labor and capital inputs). Based on this information, we can conclude that:   a. decreasing returns to scale exist. b. average cost is decreasing. c. average cost is constant. d. increasing returns to scale exist.

22. What does the Long Run Average Cost curve depict? a) It depicts the relationship between Average (Total) Cost and quantity produced when at least one input is fixed b) It depicts the relationship between Average (Total) Cost and the scale of operation in the long run c) Both a) and b) are true d) Neither a) nor b) is true 24. Assume that you start your own business producing clay pots and hire workers to start production. The first worker produces 20 clay pots a day, and when your hire the second worker, total production increases to 48 clay pots a day. What is the marginal product of labour for the second worker? a) 20 b) 28 c) 68 d) 34

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10. Do the following production functions have increasing, decreasing, or constant returns to scale? Show work.(i) Q = 3K+2L (ii) Q = 6KL