Author Question: Refer to Figure 6.2. The situation pictured is one of A) constant returns to scale, because the ... (Read 72 times)

rosent76 · **on:** Jul 1, 2018

Refer to Figure 6.2. The situation pictured is one of

A) constant returns to scale, because the line through the origin is linear.
B) decreasing returns to scale, because the isoquants are convex.
C) decreasing returns to scale, because doubling inputs results in less than double the amount of output.
D) increasing returns to scale, because the isoquants are convex.
E) increasing returns to scale, because doubling inputs results in more than double the amount of output.

Question 2

After the imposition of a tax of 2 per unit of output, what is the profit maximizing price?

A) 11
B) 21
C) 31
D) 41
E) none of the above