Microeconomics Question

1. (15 points) Multiple Choice Questions: Choose the Best Answer. 1-1. Suppose the production function for a good is given by f(k,[) = 4k + 21, where k and [ are capital and labor inputs. Consider the following three statements about this function: L The function has increasing returns to scale. IL The function has a constant marginal rate of technical substitution. III. The function has a constant elasticity of substitution equal to infinity. Which of the following about these statements is true? (a) II and III but not L. (b) I and II but not III. (c) Only IL (d) None of them. (e) All of them. 1-2. In the short run, as long as marginal cost is greater than average variable cost, (a) average fixed cost is constant. (b) average variable cost will be rising but average total cost may be rising or falling. (c) both average variable cost and average total cost will be rising. (d) average variable cost is rising but average total cost will be falling. (e) none of the above. 1-3. Profit functions are homogeneous of degree (a) zero in input and output prices. (b) one in input prices. (c) one in input and output prices. (d) both (b) and (c). (e) none of the above