Marco HW

pdf

School

Rutgers University *

*We aren’t endorsed by this school

Course

302

Subject

Economics

Date

Feb 20, 2024

Type

pdf

Pages

Uploaded by SuperJellyfish4038

What are the factors of production? - The factors of production or the inputs include Labor (L) and Capital (K) What is a production function? - The production function tells us how much input (Y) is produced for any given amount of input. The formula is Y = F(K,L), where F is the function that changes K, L to output. What are the components of Cobb - Douglas (CB) production function? - The components of the CB production production function include Capital (K), Labor (L), and A (Total Factor Productivity) What are the three components in CB production function? - The three components of the CB production production function include Capital (K), Labor (L), and A (Total Factor Productivity) What do the exponents in the CB function represent? - The exponents in the CB function represent labor and capital. Capital (K) is raised to the .7 power and Labor (L) is raised to the .3 power because the shares of the labor and capital income remain constant overtime. What is A in the CB function? How do you calculate A? - The A in the CB function can be described as Total Factor Productivity. You can calculate A, by dividing the output (Y) by the (Labor raised to the .3 power x Capital to the .7 power) What is constant returns to scale? - Constant returns to scale is when the total production increases, the value of the good also increases. What is diminishing marginal product? - Diminishing marginal product can be described as when the amount of one factory input increases (Other inputs constant, the marginal product declines. What is MPL and what is MPK? - MPK shows us how much output increases for each unit of capital holding other inputs constant. MPL indicates how much output increases for each unit of labor, holding other inputs constant.

What is a positive supply shock? - A positive supply shock is a positive change in the output an economy can produce from the amount of capital and labor. What is a response function to a negative supply shock in terms of MPK? - The response function to the negative supply shock would be the output at any level of capital would decrease. This would cause the slope of the production function to decrease. What explains the richness and poorness of the country? - By measuring per capita income, we can see the average income of each working citizen. With the per capita income we can also see the productivity efficiency of the economy and the amount of capital per person. How is the richness of a country measured? - Richness of a country is measured by its per capita income. What is perfection competition? - Perfect Competition are firms that take the market prices as given since they do not have the power to change prices. What are economic profits? - Economic profit can be defined as the revenue from selling goods and services minus the cost of the input. What are the key components of economic rents? - The key component of economic rent include the revenue of selling goods and services, the cost of using capital, and the cost of labor. What is the cost of capital and labor called? - The cost of capital is called the rental price of capital, while the cost of labor is called the wage rate or the price of labor. What is the difference between real rental cost and real wage rate? - The real rental cost is the price of capital in terms of good and services, while real wage rate is the wage in terms of good and services. What are the symbols that represent MPL and MPK.

- The symbol that represents MPK is RC (R/P), and MPL is represented by W (W/P). What determines the MPL and MPK? (This will be on your exam and most of you will get it wrong) - MPL determined by change in output that results from adding another unit of labor. MPK is determined by the change of price that is attached to income that could have been lost if capital was rented out elsewhere besides production. What does excess supply affect wage rage? - If there was excess labor, it would cause employers to lower wages since they have enough employees already. What is national income divided into? - National income can be divided into Real Labor Income + Capital Income. Another way could be Y = .7 Y + .3 Y What determines real wages over time? - Real Wages are determined by the marginal force of labor. W = MPL = .7(Y/L)

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

CH05.pdf

Quiz 6, Chapter 6.docx

Quiz 2, Chapter 8.docx

Quiz 7 and 8.pdf

MKT421 Week 4 Test.xlsx

Excel HW 3 Bruin Ski Package Distribution Plan FORMAT.xlsx

INT 220 Module 3 Assignment.docx

INT 220 Module 4 Discussion Post.docx

WSJ Example .pdf

Module 1 Discussion Post.docx

ECO 201 Module 8 Project - Economic Simulations.docx

Module 3 Discussion.docx

Recommended textbooks for you

Microeconomic Theory

Economics

ISBN:9781337517942

Author:NICHOLSON

Publisher:Cengage

Principles of Microeconomics (MindTap Course List)

Economics

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:Cengage Learning

Managerial Economics: Applications, Strategies an...

Economics

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:Cengage Learning

Microeconomics A Contemporary Intro

Economics

ISBN:9781285635101

Author:MCEACHERN

Publisher:Cengage

ECON MICRO

Economics

ISBN:9781337000536

Author:William A. McEachern

Publisher:Cengage Learning

Microeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Microeconomic Theory
Economics
ISBN:9781337517942
Author:NICHOLSON
Publisher:Cengage
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage
ECON MICRO
Economics
ISBN:9781337000536
Author:William A. McEachern
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning