The following is not a property of the translog cost function:
A)The constant elasticity cost function is a special case of it.
B)The average cost may be U-shaped.
C)It is a good approximation for almost any production function.
D)It only applies to long run total costs.

Question

Quizplus · Accepted Answer

The translog cost function can be used to analyze both short run and long run total costs. Therefore, statement D is incorrect. Statements A, B, and C are true, making D the only incorrect statement. The translog cost function applies to both short run and long run total costs, so statement D is incorrect. Statements A, B, and C are all true properties of the translog cost function.

The Following Is Not a Property of the Translog Cost