Consider a two-good production economy in which both goods are produced with fixed proportions production functions. Then, some efficient allocations will exhibit unemployment of some factor providing:
a. the firms use the inputs in different proportions.
b. the firms exhibit diminishing returns to scale.
c. the firms exhibit increasing returns to scale.
d. production can never be efficient if there are unemployed inputs.
a
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In the figure above, the SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. If there is no Ricardo-Barro effect and the government now runs a balanced budget,
A) the interest rate will increase from 4 percent to 6 percent. B) there is a surplus of investment funds and the interest rate falls to 4 percent. C) there is shortage of investment funds of $0.4 trillion. D) the equilibrium interest rate is 6 percent and investment is $1.6 trillion. E) the equilibrium interest rate is 4 percent and investment is $1.8 trillion.
The formula for optimal employment of two resources, x and y, is
a. MPx - MPy b. MRPx = MRPy c. MPx ? Px = MPy ? Py d. MRCx = MRCy e. MRPx/MRCx = MRPy/MRCy = 1
In the table above, diminishing returns
A. begin with the fourth unit of labor. B. begin with the fifth unit of labor. C. begin with the third unit of labor. D. begin with the first unit of labor. E. do not occur because output is positive for all levels of labor usage.
If a country has a lower opportunity cost in producing a good than its trading partners, then it has:
A. A comparative advantage in producing the good. B. Favorable terms of trade in producing the good. C. An absolute advantage in producing the good. D. Lower labor costs in producing the good.