ECON 2D03 Study Guide - Quiz Guide: Factors Of Production, Production Function, High Tech

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7 Jan 2014

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If a part of a statement is false, then the whole statement is false. Use scan sheet to circle a if the statement is true (t) and circle b if the statement is false (f). Answer questions #1- 2 on the basis of the following production function in an economy. Y = l1/2k1/2, where y is total output, l is labour and k is capital. We can re-write labour-productivity function as: y = k1/2, where y is the output per labour and k is the capital labour ratio. If l increases by 2 percent and k increases by 4 percent, then y increases by 3 percent. If l increases by 2 percent and k increases by 4 percent, then labour productivity increases by 1%. Canada"s total factor productivity is less the total factor productivity in usa, but. Canada"s capital-productivity is higher than that in usa. In comparison to usa, canada"s innovation gap is manifested by lower r&d spending.

Related Questions

Use the following information to answer the next 2 questions: GDP per capita can be shown to equal average labor productivity times the proportion of the population that is employed (GDP/population= Y/L * L/population).

(a) The two factors that determine a nation's standard of living are: 1) the proportion of the population that works, and 2) its output per worker. The United States has an aging population and the proportion of the population that works is expected to decrease. Mexico has a relatively young population and, thus, the proportion of its population that works is expected to increase in the future. Given these circumstances, which of these two factors do you think is more relevant in each country for their standard of living? Explain your answer.

(b) Explain what happens with Econoland's total output (GDP) and its standard of living (as measured by GDP per capita) between 2014 and 2015, if we know the following information. The population of Econoland remains constant at 1,000 persons during both years. The number of employed workers increases from 400 in 2014 to 440 in 2015, but labor productivity, as measured by output per employed worker, decreases from $2,000 to $1,900 during the same time period. Show your derivations.

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For each of the following assertions, please indicate whether they are true or false. No credit will be given without an explanation as to why your claim is correct.

(a) (4 points) There are two firms: one has production function f (K, L) = K + L and the other has production function f?(K,L) = (K+L)2 ?50. Assertion: These two firms have the same shaped isoquants, but different technology.

(b) (4 points) Assertion: In the short run, if the marginal product of labor curve is decreasing, then it is below the average product of labor curve.

(c) (4 points) A T-shirt company can make 1000 T-shirts with 2 workers and 1 machine. It continues to make 1000 T-shirts if it has more than 2 workers but only 1 machine or 2 workers and more than 1 machine. The company currently produces 1000 shirts per month for its single customer. The price of capital falls, but the firm must still produce 1000 shirts per month. Let all inputs be variable. Assertion: The firm will not hire or fire any workers.

(d) (4 points) A technology firm has a Cobb Douglas production function and measures the marginal rate of technical substitution (MRTSLK) at MPL/MPK = 3. The prices of labor and capital faced by the firm are such that currently W/R = 2. Assertion: The tech firm can lower costs (holding output fixed) by laying off some of its labor force and using more capital.

please answer every question fully if you understand it 1 and 2 For each part of this question, please refer to and use one of the following concepts in your answer

. â¢ Intertemporal Substitution of Labour Supply

â¢ Total Factor Productivity

â¢ Aggregate Production Function

â¢ Policy Ineffectiveness Proposition

â¢ Lucas Critique

â¢ Stochastic vs Systematic

(1) Consider an economy where the following occurs:

â¢ In even-numbered years, the money supply does not change

â¢ In odd-numbered years, the money supply increases by 10%.

Perhaps surprisingly, output does not vary from year to year, it remains constant. Unemployment does not vary from year to year, either. As for inflation:

â¢ In even-numbered years, inflation is 0%

â¢ In odd-numbered years, inflation is 10%

Illustrate a graph of aggregate supply and aggregate demand to show how the observed behavior of output and unemployment occurs when the economy switches from an even-numbered year to an odd-numbered year. Explain how and why this outcome occurs.

(2) In the same economy as above, in the year t (an odd-numbered year), the money printing press catches fire, and there is no change in the money supply. However, no one notices this until the end of the year.

Which of the following is the most likely rate of inflation in year t: 0%, 10%, or something between the two?

Which of the following is the most likely value of output in year t: the usual level of output, more output than usual, or less output than usual?

Explain why this result differs from the outcome in an even-numbered year. If it does not, why not?

ECON 2D03 Study Guide - Quiz Guide: Factors Of Production, Production Function, High Tech

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