ECON 202
The production process is an extremely complicated task, so economists
2 make a number of simplifying assumptions. Which of the following assumptions do economists make in their basic model of producer
...
ECON 202
The production process is an extremely complicated task, so economists
2 make a number of simplifying assumptions. Which of the following assumptions do economists make in their basic model of producer behavior?
I. Multiproduct firms: All firms produce at least two goods.
II. Firms only use two inputs in the production process: capital and labor.
III. Cost minimization: Firms attempt to produce a fixed quantity of output lowest possible total cost.
IV. Firms can produce more output by using more inputs.
• I and IV Incorrect
• I, II, III, and IV Incorrect
• II, III, and IV (True Answer )Correct
• I and III Incorrect
303 A basic assumption of the short run is that a firm:
• can employ more workers and add more capital to the production process. Incorrect
• cannot adjust its workforce or the amount of capital it uses. Incorrect
• can reduce the number of workers it uses, but it cannot adjust how much capital it uses. (True Answer
)Correct
• can freely adjust the amount of labor and capital that it employs. Incorrect
304 A basic assumption of the long run is that a firm:
• cannot change the amount of labor or capital that it employs. Incorrect
• can change the amount of labor and capital that it employs. (True Answer )Correct
• can change the amount of capital that it employs but not the amount of labor. Incorrect
• cannot change the amount of capital that it employs but can change the amount of labor. Incorrect
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