Output per worker ($ thousands) 0 0 Capital equipment per worker ($ thousands) Which TWO of the following statements are correct? Select one or more: a. The slope of the function is the marginal product of capital. b. The figure shows that each extra $ of capital per worker raises output per worker by an equal amount. c. The function is "convex" (¿.e. it has a slope which increases as capital per worker rises). Od. The figure shows that higher capital per worker increases output per worker. Production function

Output per worker ($ thousands) 0 0 Capital equipment per worker ($ thousands) Which TWO of the following statements are correct? Select one or more: a. The slope of the function is the marginal product of capital. b. The figure shows that each extra $ of capital per worker raises output per worker by an equal amount. c. The function is "convex" (¿.e. it has a slope which increases as capital per worker rises). Od. The figure shows that higher capital per worker increases output per worker. Production function

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.8P

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Please complete the following statement. When isoquants are convex a. the marginal rate of technical substitution rises as the quantity of labour increases. O b. none of the other options. O c. labor, but not capital, is subject to the law of diminishing marginal returns. O d. the marginal rate of technical substitution falls as the quantity of labour increases. O e. as labour increases and capital decreases, both the marginal product of capital and labour decrease.
Consider the following diagram of the per-worker production function (output per worker as a function of capital per worker) Production function Capital equipment per worker (S thousands) Which 2 of the following statements are correct? Select one or more: O a. The higher capital per worker is, the higher the marginal product of capital is. O b. The diagram is consistent with the diminishing marginal product of capital. Oc. When workers have less capital, an increase in capital per worker has much more impact than when they already have a lot. O d. The slope of a tangent to the curve shows the marginal product of labour Output per worker (S thousands)
Consider the following diagram of the per-worker production function (output per worker as a function of capital per worker) A. Production function Capital equipment per worker ($ thousands) Which 2 of the following statements are correct? Select one or more: а. The higher capital per worker is, the higher the marginal product of capital is. b. The diagram is consistent with the diminishing marginal product of capital. O c. When workers have less capital, an increase in capital per worker has much more impact than when they already have a lot. O d. The slope of a tangent to the curve shows the marginal product of labour Output per worker ($ thousands)
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70,0001 Norway 60,000 United States 50,000- Netherlands Denmark •. Germany France 40,000- :UK South Korea Jарan. Italy" • Spain 30,000- Greece Russia 20,000- Mexico Chile Turkey 10,000- 0. 6,400 6,500 6,600 6,700 6,800 6,900 7,000 7,100 7,200 7,300 7,400 7,500 Average annual hours of free time per worker According to the graph: Select one or more: а. UK workers have more free time than Greek workers. b. UK workers have lower GDP per capita than Spanish workers. O c. The relationship between GDP per capita and free time is downward sloping. d. US workers work longer hours than French workers. GDP per capita (USD PPPS)
3. First, do the following functions exhibit increasing, constant, or decreasing returns toscale? Why? Explain in detail. Second, calculate the marginal product of each factorand discuss what happens to the marginal product of each individual factor as that factoris increased and the other factor is held constant. a. q = 3L + 4Kb. q = (2L + 2K)1/3c. q = 2LK2d. q = L1/4K1/3e. q = 4L1/2 + 4K
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3. Theo employs labor at a competitive wage (W) of $3 per unit, and he employs capitalat a competitive rental rate (R) of $6 per unit.a. State the cost-minimizing rule. You must provide both a written statement of it, and state it as anequation.b. At Theo’s current combination of labor and capital, the marginal product of labor (MPL) is twiceas large as the marginal product of capital (MPK). Is Theo currently employing the optimal ratio oflabor and capital? If not, how should he adjust his hiring of labor and/or capital? Explain.