Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 7, Problem 2.4P
To determine
Production technology.
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The difference between technology and technological change is that technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. technology is product-centered, that is, developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. technology involves the use of capital equipment while technological change requires the use of brain power.
For firm A, is the following an internal or external economy of scale?
Firm A benefits from a pool of trained labour in the area.
Which of the following describes an increase in technological knowledge?
A farmer discovers that it is better to plant in the spring rather than in the fall.
A farmer sends his child to agricultural college and the child returns to work on the farm.
A farmer hires another day laborer.
A farmer buys a tractor.
Chapter 7 Solutions
Principles of Economics (12th Edition)
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- 1) In connection with the Law of the Minimum and the Law of Diminishing Returns, describe how the production function model can be a helpful tool in managing an agricultural production system.arrow_forwardExplain why an increase in the price of an input must typically cause an increase in the long-run total cost of producing any particular level of output.arrow_forwardWould you please tell me how the economies of scale can spread out the cost of production, so that the average cost of each product is reduced?arrow_forward
- Identify 10 examples of direct factors (labor, capital, technology, resources) used for production and 10 examples of indirect factors (i.e factors other than labor, capital, technology, or resources).arrow_forwardProblem 1 - Macroeconomics - please help.arrow_forwardQUESTION 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…arrow_forward
- Question 1: Consider the following production function that depends only on labor:Q = 81¹/2 1. Write a combination of input and output that are technically efficient. In other words, for what level of L and Q, is the technology efficient? 2. Write a combination of input and output that are technically inefficient. In other words, for what level of L and Q, is the technology inefficient? 3. Write a combination of input and output that are technically unattainable. In other words, for what level of I and Q, is the technology unattainable?arrow_forwarda) The production function q = 9K0.8LO.1 exhibits [ increasing returns to scale, constant return to scale,decreasing returns to scale, none of the above ] b) The production function q = K1.2 + 3L1.2 exhibits [ increasing returns to scale, constant return to scale,decreasing returns to scale, none of the above] a) The production function q = 9KO.8L0.1 exhibits [ Select ] %3D b) The production function q = K1.2 + 3L1.2 exhibits [Select] %3Darrow_forwardWhere average costs of production are lowest when all output is produced by a single firm.arrow_forward
- True or false. In general, production can display diminishing returns in all variables but still display increasing returns to scale. Explain why you think so.arrow_forwardThe graph that shows the relationship between quantity produced and total costs is called ……………… a) None of the mentioned b) Export c) Production function d) Total-cost curvearrow_forwardSee attached image. If there is any work to show, show all work please.arrow_forward
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