The following Cobb-Douglas production function, Q = ...

[Yolanda]

The following Cobb-Douglas production function, Q = 1.8L0.74K0.36, exhibits
 
  A) increasing returns.
  B) constant returns.
  C) decreasing returns.
  D) Both A and B

Question 2

If a firm is currently in short-run equilibrium earning a profit, what impact will a lump-sum tax have on its production decision?
 
  A) The firm will decrease output to earn a higher profit.
  B) The firm will increase output but earn a lower profit.
  C) The firm will not change output but earn a lower profit.
  D) The firm will not change output and earn a higher profit.

[JCABRERA33]

Answer to Question 1

A

Answer to Question 2

C