Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Chapter 6, Problem 6RQ
To determine
The criteria that determines fixed factors and variable factors.
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a) What criteria determine whether a factor is considered fixed or variable? Faced with constantly changing conditions, why would a firm ever keep any factors fixed?
Explain how a change in the price of one input factor changes a firm’s long-run expansion path?
What is the difference between the short run and long run for a firm? How does this relate to
fixed and variable inputs?
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Microeconomics (9th Edition) (Pearson Series in Economics)
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- What is the difference between a fixed input and a variable input?arrow_forwardwhat is the difference between a firm's expansion path in the short run compared to the long run?arrow_forwardIf a firm has economies of scale, it must have increasing returns to scale. True or false? PLEASE EXPLAIN IN DETAIL .arrow_forward
- Explain why an increase in the price of an input must typically cause an increase in the long-run total cost of producing any particular level of output.arrow_forwardWhat is the difference between the short-run and long-run production periods? Why is it relevant to the economics analysis of firms? If different types of inputs are not as easy to adjust in a certain time period, what difference does this make to the graphs of cost curves for economic analysis?arrow_forwardWhy might marginal product be increasing at lower levels of output and decreasing at higher levels of output?arrow_forward
- A production function is represented by P=f(L), where L is labour. As input L increases, the total output will increase but what will happen to marginal product? Can marginal product be zero? if so, what it meanarrow_forwardA firm's production function is given by the 4L0.5K0.5. Which of the following equation Q = is false? %3D The marginal product of labor is the partial derivative ƏQ/ƏL. The marginal product of capital is the partial derivative aQ/aK. JQ/ƏL = 2L-0.5KO.5 = dQ/ƏK = 4L0.5K-0.5 –arrow_forwardWhat stage of production is the increase in output that results from increase in a firm's outputs by some proportion? If the firm is operating efficiently, how can it reduce cost in the short run?arrow_forward
- What is the difference between a fixed input and a variable input?arrow_forward4arrow_forwardDuring a coffee-room debate among several young MBAs who had recently graduated, one of the young executives flatly stated, “The most this company can lose on its Brazilian division is the amount it has invested (its fixed costs).” Not everyone agreed with this statement. In what sense is this statement correct? Under what circumstances could it be false? Explain.arrow_forward
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