Macroeconomics
Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 3, Problem 1AP

a)

To determine

The impact of an increase in total factor productivity on the graph of production function relating output to capital and output to labor.

b)

To determine

To show: that a 10% increase in total factor productivity also increases the MPK and the MPN by 10% at any level of capital and labor.

c)

To determine

The effect of beneficial supply shock on MPK and MPN.

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Recent research indicates potential health benefits associated with coffee consumption, including a potential reduction in the incidence of liver disease. Simultaneously, new technology is being applied to coffee bean harvesting, leading to cost reductions in coffee production. How will these developmentsaffect the demand and supply of coffee? How will the equilibrium price and quantity of coffee change? Use both words and graphs to explain.
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