The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

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Answer 1

Question

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.

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2. a) Consider a market where one firm (firm 1) currently produces, but a second firm (firm 2) is intending to enter and sell an identical product. The market has inverse demand given by p = 40 – Q, where Q is the total output sold in the market. Firm 1 has a marginal cost of 16 and firm 2 has a marginal cost of c < 16, with no fixed cost for either firm. Firm 2 has a choice of competing on price or quantity, with firms making their choices simultaneously (i.e. the market will be either a Bertrand or Cournot duopoly). If you were advising firm 2 on entering this market, how would you advise it to compete? To what extent would the size of firm 2’s cost advantage affect your advice? b) Now assume that firm 2 is aware that other firms are considering entering the market, so the market may over time change from a duopoly to an oligopoly with more than two firms. This would not change the nature of competition (i.e. any additional firms would set price or quantity in line with the first…

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Answer 2

Question

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.

Answer 6

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.

Answer 7

Chapter 3, Problem 1RQ

To determine

The concept of production functions along with the factors that cause a shift in the production function and other factors that determine the total output that an economy can produce is to be determined.

Answer 8

Expert Solution & Answer

Explanation of Solution

Production function explains the relationship between output produced and inputs used in the production process with the given technology.

Mathematically, a production function can be expressed as follows-

Y=AF(K,L)

Where,

Y = output produced

A= labor productivity measure

K= capital input

L= labor input

The factors that can shift a nation’s production function are as follows-

Improvement in technology- Any technology advancement leads to efficient production. Labor gets skilled and can produce more using the same amount of inputs. This, in turn, shifts the production function upward.
An increase in capital stock and labor- Rise in the availability of inputs leads to an upward shift in the production function. As with more inputs, more output can be produced.

The level of factors of production including land, labor, capital, and entrepreneur determine the level of output an economy can produce. Higher the availability of factor inputs, the higher will be the output produced by an economy.