From the Cobb-Douglas production function we learn that there are two sources that help explain cross-country differences in per capita income: ________ and ________
A) capital; labor productivity
B) labor share of income; TFP
C) TFP; capital per person
D) labor per person; capital
E) none of the above
C
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What will be an ideal response?
If the wage rate rises, labor's share in the total costs of a production process
a. will increase. b. will decrease. c. may increase or decrease depending on the elasticity of demand for the product. d. may increase or decrease depending on the ease of substitution of other inputs for labor.
A severe problem that many economists have with the active use of monetary policy and fiscal policy to stabilize the economy is that, while those policies obviously work well in practice, they are not well understood on a theoretical level
a. True b. False Indicate whether the statement is true or false
Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. If both Amy and Mike produce the good in which they have comparative advantage, the total annual output of this economy will be ________.
A. 10,000 pounds of cheese and 30 cars B. 10,000 pounds of cheese C. 5,000 pounds of cheese and 20 cars D. 30 cars