PROBLEMS AND SOLUTIONS. Pa LP Basics. dicate whether each of the lollowing statements is trve or false and explain why. ‘A. Constant retums to scale and constant input pices are the only requirements for atotal cost function to be linear B. Changing input prices will aways alte the slope of aciven isocost ine. variables imply that he amount ef an input resource employed exceeds the amount available. D. Equal dstances along a given process ray indicale equal ouput quantities. "Nonbinding censtraints are constraints that intersect a the optimum solution. SOLUTION True. Constant reums to scale, when counled with corstant input pices, will resut 1h a fnear {dal cos! function False. The slope of anisocost line i given by the raio of input prices (@.g.,¥ = Co! Pr+ (PuPy)X).. Therelore, t allinput prices rise or fll by a given percentage, due to economy-wide irlation or deflation, ten the isocost Ine slope willbe undlfecte, True. Stack variables can nevertake on negative values. For example, in output revenue, or frof maximization near progarmming problems, this would imply that theamotnto! the resource used exceeds the amount available. Thus, slack variables ‘are included in the general non‘nagativty requremerts forall problems. ‘rus. Oulput along a given process ray inereases proportionately with increasos in the input factors. Therelore, equal dstances along a given proces ray indicate equal ‘output quantiies, Fale, Binding constraints are constraints thal intersect a the optimum solution,P22 Fixed InputCombinations. Cherry Devices, Inc.. assembles connectors and terminals for elecronic products at a plant in New Haven, Connecticut. The plant ses laber (.) and capa (K) in an assembly Ine process to produce oulpu (Q), were a = 0028.%K MPL = 00025(0.5°%™ oo1sK"* a Pe, 025,051" 00125." o ‘A. Calculate how many unis of aulpud can be produced wih 4 units of labor and 400 unts of captal and wih 16 units of labor and 1,600 unts of capital. Are retums to scale noreasng, constant, or dninising? B. Calcul the change n the marghal produd cf labor ac labor grows: fern 4 10 16 unis, holdng capa censtant at 400 units. Simi calculate the change 'n the marginal product of capital as capital grows fom 400 to 1,600 unis, holding labor constant al 4 unis. Ave relums to each factor increasing, constant, or aimisting?