Determine the output expansion path (equation) for a Cobb-Douglas production function f(L,K) = 10LaK1-a. How does the shape of the output expansion path change as "a" changes?
What will be an ideal response?
Using the MRTS = w/r:
aK/(1 - a)L = w/r K/L = (1 - a)w/ar
As "a" increases, the output path gets flatter.
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Referring to the graph above, assume that, at first, the labor market is in equilibrium at point 4. In which scenario does unemployment rise, with no change in the quantity of employment?
A) real wage rises to the level of points 1 and 2 B) supply shifts to pass through point 5, with no change in the real wage C) demand shifts to pass through point 3, with no change in the real wage D) supply shifts to pass through point 3, with no change in the real wage
Suppose that a successful advertising and promotion campaign occurs for apples. Given this successful campaign, it is likely that:
A) The quantity of apples sold will fall and the price of apples will fall. B) The quantity of apples sold will fall and the price of apples will rise. C) The quantity of apples sold will rise and the price of apples will fall. D) The quantity of apples sold will rise and the price of apples will rise.
In a perfectly competitive market, the market demand curve is ________ , while an individual firm's demand curve is ________
a. downward-sloping; horizontal. b. downward-sloping but relatively flat; downward-sloping but relatively steep. c. horizontal; downward-sloping. d. horizontal; vertical
If the dollar were to increase relative to the currencies of our major trading partners, our trade deficit would tend to ______________.
Fill in the blank(s) with the appropriate word(s).