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Question 1 (25 points) Stanislawjust bought a store in quaint Upstate village, for $150,000. His broker told him to expect that maintenance and repairs will
Question 1 (25 points) Stanislawjust bought a store in quaint Upstate village, for $150,000. His broker told him to expect that maintenance and repairs will cost him $7,500 a year. She also advised that, should he want to rent, he's bound to make $800 per month. Stanislaw's yearly user cost of capital is l:--I::I 6.4% if} 5% C) 1.4% 1\"th 11.4% Question 2 (25 points) As long as the isoquants are strictly convex, a necessary condition for cost minimization is that the slopes of isoquant and isocost equal each other. '1',th True 11\" :11 False Question 3 (25 points) If a firm's technology features constant returns to scale, 1' "'1. the firm will necessarily benefit from economies of scale. .;: the firm may benefit from economies of scale. 1' "'1. the firm cannot have economies of scale. .;:' the firms has no scale. Question 4 (25 points) The average cost of production of a chain store may increase with output because it may be hard for management to keep track of an increasing number of establishments. {Ca True if") False
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