Suppose you have a Cobb-Douglas function with a capital elasticity of output (á) of 0.28 and a labor elasticity of output (â) of 0.84 . What statement is correct?
a. There are increasing returns to scale
b. If the amount of labor input (L) is increased by 1%, the output will increase by 0.84%
c. If the amount of capital input (K) is decreased by 1%, the output will decrease by 0.28%
d. The sum of the exponents in the Cobb-Douglas function is 1.12.
e. All of the above
e
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Since most people prefer more money to less, the desire for more money
A) makes it difficult to induce people to cooperate. B) makes it difficult to induce people to sacrifice for the larger public good. C) makes social order highly unstable and unpredictable. D) can induce useful changes in behavior. E) implies people are living in a capitalist society.
Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank. As a result, the monetary base ________, and the quantity of money will ________ $50 million due to the ________
A) increases; increase by more than; money multiplier B) decreases; decrease by more than; money multiplier C) increases; increase by more than; expenditure multiplier D) decreases; decrease by less than; expenditure multiplier E) increases; decrease by; currency drain
According to the relationship represented by the consumption function, governments can indirectly decrease consumption spending by
a. increasing taxes. b. decreasing transfers. c. decreasing taxes. d. decreasing government spending.
According to the substitution effect of labor supply, when the wage rate goes up:
A. it becomes more costly to consume leisure, so people will work more. B. it becomes less costly to consume leisure, so people will work more. C. the opportunity cost of enjoying leisure goes down. D. firms will hire more workers since people are more willing to work.