Author Question: Consider a two-good production economy in which both goods are produced with fixed proportions ... (Read 33 times)

KimWrice · **on:** Jul 1, 2018

Consider a two-good production economy in which both goods are produced with fixed proportions production functions. Then, some efficient allocations will exhibit unemployment of some factor providing
a. the firms use the inputs in different proportions.
b. the firms exhibit diminishing returns to scale.
c. the firms exhibit increasing returns to scale.
d. production can never be efficient if there are unemployed inputs.

Question 2

Suppose demand for a good is QD = 100 - P and supply is QS = -20 + P. Suppose that a nationwide quota (of 20) is enforced so that more can be used in a war effort. What is the consumer surplus?
a. 200
b. 400
c. 600
d. 800