1. Microeconomics

Producer Theory — Quiz

Test your understanding of producer theory with 5 practice questions.

Practice Questions

Question 1

Which of the following distinguishes explicit costs from implicit costs in a firm’s accounting?

Question 2

Given a firm’s total revenue function $TR(Q)=100Q - Q^2$ and total cost function $TC(Q)=20 + 10Q + 2Q^2$, what output maximizes profit?

Question 3

For the Cobb-Douglas production function $Q=L^{1/3}K^{2/3}$, what is the marginal rate of technical substitution (MRTS) of labor for capital?

Question 4

Assess the returns to scale for the production function $Q=2L^{0.5}K^{0.5}$. If inputs are doubled, output becomes:

Question 5

Given the variable cost function $VC(Q)=4Q+Q^2$, derive the average variable cost $AVC(Q)$ and marginal cost $MC(Q)$. For which range of $Q\ge0$ does $MC(Q)<AVC(Q)$?