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