Eco quiz 4 eco 3203

Mpk equals R, the firm

Has the optimal amount of capital

Cording to figure 4.5, does the production model accurately predict the level of per capita GDP for Singapore?

Yes, because the predicted value of per capita GDP for Singapore is close to the actual value of its per capita GDP meaning the model successfully predicts singapores per capita GDP

A production function exhibits increasing returns to scale when you

Double each input, you more than double the output

The solution to the firms profit maximization is

MPL equal W & MPK equal r

Mpl is less then W, the firm

Should fire some labor until MPL equal w

Mpk is greater than r, the firm

Should hire More Capital untill MPK equals are

A firm uses capital in labor to produce a good. Which of the following is greatest

Accounting profit Economic profit equals total revenue minus payments to all inputs. Accounting profit equals total revenue minus payments to inputs other than capital

Which of the following production function exhibits constant returns to scale

All of these answers are correct because they equal to one

One of the key Characteristics of the Cobb Douglas production function is

Constant returns to scale

The marginal product of the labor curve represents

Demand for labor

Oh put per capita output per worker are

Equal in the production model, but output per capital is smaller in general

Capital per person explains about 1/2 of the difference in per capita income between the richest and poorest countries

False the capital to population ratio explains about 1/3 of the difference while TFP explains the rest

If the marginal product of capital is less then the rental rate of capital, the firm should rent more capital

False, a firm should only the rent more capital if the MPK is greater than the rental rate of capital

Consider two economies. If each country has the same production function in the same amount of capital and labor, the country that ____ produces more.

Is more productive

The marginal product of labor is defined as

The additional output generated by hiring in additional unit of labor

In the production model from the text, which of the following is not an exogenous or a parameter

The amount of capital The amount of capital used in production is an unknown endogenous variable that must be solved for. The other three options are parameters

If the productivity parameter is assumed to equal one, the production model

The model implies that more capital implies more output per person but incorrectly over estimates the value of per capita output

In a Cobb Douglas production function, the factor share income going to each input is equal to the exponent on the input in the production function

True, Regardless of the amount of capital or labor in a economy, the exponents in the production function determine the factor shares