For each of the following assertions, please indicate whether they are true or false. No credit will...

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For each of the following assertions, please indicate whether they are true or false. No credit will be given without an explanation as to why your claim is correct. (a) (4 points) Assertion: In the short run, if the marginal product of labor curve is increasing, then it is above the average product of labor curve. 4 (b) (4 points) Assertion: The Law of Diminishing Marginal Returns implies that the short run production function must be concave everywhere. (c) (4 points) There are two firms: one has production function f(K, L) = K + L and the other has production function f * (K, L) = (K +L XXXXXXXXXXAssertion: These two firms have the same shaped isoquants, but different technology. (d) (4 points) A technology firm has a Cobb Douglas production function and measures the marginal rate of technical substitution (MRT SLK) at MPL/MPK = 3. The prices of labor and capital faced by the firm are such that currently W/R = 2. Assertion: The tech firm can lower costs (holding output fixed) by laying off some of its labor force and using more capital.

Robert · Accepted Answer

(a) True. These two firms have the same shaped isoquants, but different technology. As the 
production functions of the firms is same with a difference of a multiplier only. the second 
production function is multiplied with a higher multiple than first one which depicts level of 
technology.

For each of the following assertions, please indicate whether they are true or false. No credit will be given without an explanation as to why your claim is correct. (a) (4 points) Assertion: In the...

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