Q3.

Suppose the demand and total cost functions for a monopoly firm are as follows :

\(Q = 100 - 0.2P\)

\(P = 500 - 5Q\)

\(TC = 50 + 20Q + Q^2\)

What will be the profit maximization output ?

Q4.

Statement (I): The elasticity of factor substitution is formally defined as the percentage change in the capital-labour ratio divided by the percentage change in the marginal rate of technical substitution.

Statement (II): \(Q = K^{0.5} L^{0.3}\) is a production function where Q = output, K = units of capital and L = units of labour. This production function shows the application of increasing returns to scale.

Codes:

Q5.

Which one of the following is not an investment appraisal technique to incorporate risk and uncertainty?