Multiple Choice

1.) The linear demand curve is represented by the equation

A. Q=a - bP2

B. Q = AP-b

C. P=Q - aP

D. Q=a - bP

2.) A difference between the short run and the long run is that a firm in the short run

A. faces an unconstrained cost minimization problem, whereas the firm is constrained in the long run.

B. faces a constrained cost minimization problem, whereas the firm is unconstrained in the long run

C. faces a constrained cost minimization problem in both the short run and the long run.

D. faces an unconstrained cost minimization problem in both the short run and the long run.

3.) Consider a production function of the form Q= K2 L2with marginal products MPK = 2KL2 and MPL = 2K2L.What is the marginal rate of technical substitution of labor for capital at the point where K = 5 and L = 5?

A. 1

B. 5

C. 25

D. 50