Production Function Concepts
Indicate whether each of the following statements is true or false. Explain your answers.
A. Decreasing returns to scale and increasing average costs are indicated when EQ 1.
B. If the marginal product of capital falls as capital usage grows, the returns to capital are decreasing.
C. L-shaped isoquants describe production systems in which inputs are perfect substitutes.
D. Marginal revenue product measures the profit earned through expanding input usage.
E. The marginal rate of technical substitution will be affected by a given percentage increase in the marginal productivity of all inputs.