# Economics questions

**Question description**

1. Explain if each of the following statements is true or not:

i. If average product is increasing, marginal product must be less than average product.

ii. If marginal product is negative, average product must be negative.

iii. If average product is positive, total product must be increasing.

2. Suppose that a firm has the production function given by f(x1,x2)=4√(x1x2). Let w1 = $64 and w2 = $1. What is the total cost of producing 20 units of output in the long-run?

3. Consider the same firm as in question 2, who is facing the same input prices

w1 and w2 as above. Suppose that we are now in the short-run and the

firm has to use x2 = 4. What is the short-run cost of producing 72 units of

output?

4. A firm produces an output using capital and labor using the production technology described by f(xL,xK) = xLxK. Let w denote the price of labor and r denote the price of capital. Assume that w = $2 and r = $1. Derive the equations for the total, average and the marginal cost functions of this firm.

## Tutor Answer

## Review from our student for this Answer

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors