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1. The following graph shows one of a firm's isocost curves and isoquants.
a. At the economically efficient method of producing 4,000 units of output the MRTS will equal _________.
a. At the economically efficient method of producing 4,000 units of output the MRTS will equal _________.
Fence Right is a firm that supplies and installs fence. Its output follows the production function
Q = 20L – 0.5L2; where L denotes labour hours and Q the length of the fence in feet. The firm hires labour at a wage of $25 per hour.
Hint: MRPL = MRC
a. DD has received an offer to install 200 feet of fence for a price of $480. Should DD accept the offer?
b. What offer would be profitable if the company desires a price of $5 per foot of fence installed (show all workings)?
Q = 20L – 0.5L2; where L denotes labour hours and Q the length of the fence in feet. The firm hires labour at a wage of $25 per hour.
Hint: MRPL = MRC
a. DD has received an offer to install 200 feet of fence for a price of $480. Should DD accept the offer?
b. What offer would be profitable if the company desires a price of $5 per foot of fence installed (show all workings)?
Suppose there are 2 countries, Home and Foreign. Each country can produce 2 goods, watches and hats. In Home, workers can make 10 watches a day and 20 hats a day. In Foreign, workers can make 20 watches a day and 30 hats a day. Which country has the absolute advantage in each good?
Which of the following is true when comparing general ag price supports (when government purchases the surplus) vs ag deficiency payments.
a) Because govt purchases the surplus under ag price support policy, the quantity demanded will decrease.
b) Deficiency payments result in higher consumer prices.
c) Ag price supports reduce producer surplus (PS).
d) Deficiency payments result in lower consumer price for the product.
a) Because govt purchases the surplus under ag price support policy, the quantity demanded will decrease.
b) Deficiency payments result in higher consumer prices.
c) Ag price supports reduce producer surplus (PS).
d) Deficiency payments result in lower consumer price for the product.
1. Company is operating on perfectly competitive markets and wants to maximize its profits. Assume that it uses the production function Y = A*L^α with A = 2 and α = 0.5. The real wage w is 4. What is the optimal value of labor L that should be employed?
L = ...?
L = ...?
The production function Y = AK^αL^β with A = 2, α = 0.4 and β = 0.6 exhibits the following
properties: (multiple answers can be correct)
(a) concavity in L
(b) convexity in L
(c) constant returns to scale in K and L (d) homogeneity of degree 1 (in K and L)
(e) increasing returns in K and L
properties: (multiple answers can be correct)
(a) concavity in L
(b) convexity in L
(c) constant returns to scale in K and L (d) homogeneity of degree 1 (in K and L)
(e) increasing returns in K and L
Efficiency wages can hel to reduce unit labor costs when ... (multiple answers may be correct)
(a) the labor productivity nonlinearly depends on the wage.
(b) the labor productivity rises faster than the wage increment.
(c) the elasticity of productivity with respect to the wage is larger than unity.
(d) the elasticity of productivity with respect to the wage is positive but less than unity.
(a) the labor productivity nonlinearly depends on the wage.
(b) the labor productivity rises faster than the wage increment.
(c) the elasticity of productivity with respect to the wage is larger than unity.
(d) the elasticity of productivity with respect to the wage is positive but less than unity.
Aggregate supply curve ... (multiple answers may be correct)
(a) is vertical in the long run because, in the long term, expected prices are equal to the actual ones.
(b) is moved to the right if the potential output rises.
(c) shows a positive relationship between the price level and output in the short run.
(d) is not affected by the expectations formation processes.
(a) is vertical in the long run because, in the long term, expected prices are equal to the actual ones.
(b) is moved to the right if the potential output rises.
(c) shows a positive relationship between the price level and output in the short run.
(d) is not affected by the expectations formation processes.
Involuntary unemployment can be caused by ... (multiple answers can be correct)
(a) a minimum wage.
(b) introduction of higher taxes.
(c) lowering taxes.
(d) employment protection legislation.
(a) a minimum wage.
(b) introduction of higher taxes.
(c) lowering taxes.
(d) employment protection legislation.
The insider-outsider theory of unemployment says that .. (multiple answers can be correct)
(a) trade unions do not internalize sufficiently the well-being of the unemployed.
(b) trade unions can be a cause for involuntary unemployment.
(c) trade unions tend to increase wages above the competitive level.
(d) the position of trade unions should be bolstered in order to lower unemployment.
(a) trade unions do not internalize sufficiently the well-being of the unemployed.
(b) trade unions can be a cause for involuntary unemployment.
(c) trade unions tend to increase wages above the competitive level.
(d) the position of trade unions should be bolstered in order to lower unemployment.
