ECO200Y1 : Summary notes 2End

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ECO200Y1 Full Course Notes

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Definitions: very short run, short run: q, long run: q, very long run: There are various levels of k and l to produce a specific level of output. Isoquants: hold q constant and see what combinations of k and l are required. Q2 represents a higher output: negatively sloped if k decreases, l must increase to keep q constant. slope. L: convex because of the law of diminishing returns. Mrts decreases as l increases and k decreases. ridge line q2 q1. L: mrts constant, mrts = 0. q2 q1. 1 = q and: constant return to scale: (output doubled). Increasing return to scale: decreasing return to scale: (output more than doubled). (output less than doubled). Math examples of long run production functions: constant return to scale: q. It"s impossible for a production function which exhibits increasing returns to scale to also adhere to the law of diminishing returns" . Do you agree: no, it is possible.

Related Questions

1. The slope of the total product curve measures

a. the marginal rate of technical substitution.

b. marginal product.

c. average product.

d. the maximum average product.

e. minimum product.

2. The Law of Diminishing Returns to a variable input (such as labor) assumes that

a. there is at least one fixed input.

b. all inputs are changed by the same percentage.

c. the firm is operating in the short run.

d. all inputs are held constant.

e. a and c.

3. An isoquant curve identifies

a. the maximum output possible, given a fixed budget.

b. the different combinations of goods the can be produced, given fixed amounts of inputs.

c. the different combinations of inputs that can be used to produce a fixed rate of output.

d. none of the above.

4. The ratio of total productivity to the total quantity of a variable input being used in production is

a. equal to marginal physical productivity of the input.

b. constant as employment levels of the input vary.

c. equal to average physical productivity of the input.

d. equal to the marginal rate of technical substitution.

Suppose that the production function is Q=L^(2/3)K(1/2).

What is the average product of labour, holding capital fixed?

What is the marginal product of labour?

Determine whether the production function exhibits diminishing marginal productivity of labour.

Determine the technical rate of substitution.

What returns to scale does the production function have?

brownkoala747

True/False (Explain) (The explanation is the most important part â no credit will be given for True/False answer alone)

1. âTechnological improvementâ refers to an increase in the amount of capital used, which causes the productivity of labor to increase.

2. A production function that is characterized by constant returns to scale cannot also have diminishing marginal returns to labor.

3. The average product of labor at any level of production describes the average amount by which output should be expected to increase if another unit of labor is added.

4. The short-run marginal cost curve slopes upward when the inputs to production exhibit diminishing marginal returns.

chocolatehamster258

ECO200Y1 : Summary notes 2End

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