A Very-Long-Run Consideration That Could Change a Firmʹs Production Function
A very-long-run consideration that could change a firmʹs production function is
A)rising cost of the factors of production.
B)increasing returns to scale of operation.
C)an improvement in education that increases the quality of the economyʹs labour force.
E)size of the plant.
Although capital is a variable factor in the long run,once chosen it often becomes a fixed factor for a long time.A profit-maximizing firm must therefore select a method of production that is
A)economically efficient at current factor prices.
B)technologically advanced beyond methods currently used.
C)labour intensive,as labour is always a variable factor.
D)economically efficient at current factor prices and sufficiently flexible to adapt to changing factor prices over time.
E)adaptable to wide ranges of output over time.
The fact that new methods to extract oil are developed as oil prices increase suggests
A)that methods of production do not change in response to factor -price changes.
B)that invention is exogenous.
C)that invention does respond to economic signals and is endogenous.
D)that oil has many close substitutes.
E)nothing; changes in technology occur regardless of market prices.
The creation of a new product is called
B)a rise in productivity.