The concept of diminishing returns to a factor of production applies not only to capital but to labor as well. Prior to the Industrial Revolution, there was not sustained growth in living standards. Draw a graph to illustrate the relationship between population and output produced, where population is measured on the horizontal axis, both pre- and post-Industrial Revolution. 1.) Using the 3-point curve drawing tool, draw the production curve showing diminishing returns to labor. Label your curve 'Pre.' 2.) Using the 3-point curve drawing tool, draw the production curve after the Industrial Revolution. Label your curve 'Post. Carefully follow the instructions above and only draw the required objects. www C G

The concept of diminishing returns to a factor of production applies not only to capital but to labor as well. Prior to the Industrial Revolution, there was not sustained growth in living standards. Draw a graph to illustrate the relationship between population and output produced, where population is measured on the horizontal axis, both pre- and post-Industrial Revolution. 1.) Using the 3-point curve drawing tool, draw the production curve showing diminishing returns to labor. Label your curve 'Pre.' 2.) Using the 3-point curve drawing tool, draw the production curve after the Industrial Revolution. Label your curve 'Post. Carefully follow the instructions above and only draw the required objects. www C G

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Economics Modify the Lewis model and assume that there is a strictly positive marginal product of labor in the traditional sector. Use figures with production functions in the traditional and the modern sectors to show what the equilibrium is when no one wants to move away from agriculture. What assumptions do you have to make about production functions to arrive at the conclusion that fewer people will end up in agriculture? Use the same starting point as in the above question. Derive the demand for labor in the traditional and in the modern sectors. Show graphically what the characteristics of the equilibrium would look like when no one wants to change sectors.
d. Calculate the marginal product of capital MPK. e. Calculate the marginal product of labor (MPL).
Consider the following production diagram: 12 10 A Capital 6 2 0 0 1 Labor 4 For each of the five labeled points (A, B, C, D, and E), determine whether the correct levels of labor and capital are being used. If the correct level is not being used, explain why, and what change should be made. Hint: Start by identifying the optimal point. Being able to compare to the optimal point will assist you in determining the changes that need to be made.
Suppose that the economy's production function is given by Y=K²N¹-a where Y is output, K is capital, and N is labor. Assume that a = 1/3. The production function transformed into output per worker is (Property format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with N character.)
What is one negative aspect of technology on productivity? Technology allows for more products to be made in a shorter amount of time. Technology allows companies to reduce the cost of making products. Technology allows for more efficient ways to produce goods. This may lead to the elimination of jobs. Technology allows for workers to work from home, which leads to fewer call-offs due to illness, inclement weather, or childcare-related issues.
Consider the production function Y=K1/2 N1/2 a. Compute output when K=37 and N=80 b. If both capital and labour double, what happens to output? c. Is this production function characterized by constant returns to scale? Explain. d. Are there decreasing returns to capital? Explain. e. Are there decreasing returns to labour? Explain. f. Write this production function as a relationship between output per worker and capital per worker. Show all your work. g. Let capital per worker be 6. What is output per worker? Now, double capital per worker to 12. Does output per worker more or less than double? h. Does the relation between output per worker and capital per worker exhibit constant returns to scale? Explain/show your work
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QUESTION THREE: PRODUCER THEORY 1. Suppose the production function for automobiles is given by q = kl - 0.8k² - 0.21² where q represents the annual quantity of bicycles produced, k represents annual capital input, and I represents annual labor input. a) Suppose k=10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many cars are produced at that point? b) Again, assuming k=10, graph the MP curve. At what level of labor input does MP₁ = 0 c) Suppose capital inputs were increased to k-20. How would your answer to parts (a) and (b) change? d) Does the production of automobiles exhibit constant, increasing, or decreasing returns to scale? 2. Supposing that the firm in (1) is a competitive firm and its production function is y = 10 + (x - 1,000)¹/3. The price of the input x is w = 1. (a) Show that the firm's total cost curve is C(y) = 1,000 + (-10)³. (b) Show that the minimum of the marginal cost curve…
Sketch a production function relating output to labour input. Now imagine that the amount of capital per person increases, thanks to the government borrowing to invest in more capital. Use dotted lines on the same diagram to show the impact on (i) total output and (ii) the average product of labour. Explain your answer. Imagine that the demographic response to a higher standard of living is strongly positive. Using a different colour of line on the same diagram, show how this demographic response to higher incomes would go on to affect incomes in the future. The population is aware that the government borrowing required to finance this capital investment will need to be paid back via tax rises, so they respond by reducing their spending. Using a “Keynesian cross” framework and sketch diagram, model this response as a fall in autonomous consumption, c0.
Consider an economy that produces goods and services according to the production function F (L, K) = 90L Ki,where L represents the number of workers in an economy and K represents the combined units of physical and human capital. The marginal products of labour and capital are: (登) MPL = 60 30(£) MPK = Question 1 Initially: there are 27 workers and 64 units of capital. Part (a): What is the economy's real GDP and GDP per capita? 1st scenario Suppose L increases to 125 while capital remains constant at 64: Part (b): Calculate the economy's real GDP and GDP per capita. Part (c): Relative to the initial scenario (L = 27 and K = 64), how much did MPL change by? 2nd scenario Now suppose L remained constant at 27 workers and capital increased to 216 units: Part (d): Calculate the economy's real GDP and GDP per capita. Part (e): Relative to the initial scenario (L = 27 and K = 64), how much did MPK change by? 3rd scenario Finally, suppose L = 54 and K = 128. Part (f): Calculate the economy's…
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