List and briefly describe the five factors of production.
What will be an ideal response?
Natural resources-those resources provided by nature. Labor-the physical and mental effort used by people to produce goods and services. Physical capital-the infrastructure, equipment, machines and structures used to produce goods and services. Human capital-the knowledge and skills obtained by workers through education and experience. Entrepreneurship-the organizing and coordination of the other four factors of production needed to produce and sell products.
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One major advantage to a fixed exchange rate system is
A) that exchange rate volatility is eliminated. B) that hedging strategies can be implemented. C) that fixed exchange rate nations seldom have credit risk problems. D) that systemic risk is eliminated.
Suppose that additional units of capital affect the marginal productivity of labor. This is not unrealistic. Word processors increase the marginal productivity of secretaries
On the other hand, robotic equipment can completely replace a worker and, thereby, lower the marginal productivity of labor. Given this possibility, determine the conditions under which isoquants will not be convex (i.e., concave).
Which of the following conveys the correct relationship between production and inventories?
A. If planned inventories > actual inventories then increase production. B. If planned inventories < actual inventories then decrease production. C. There is not clear relationship between inventories and production. D. If planned inventories > actual inventories then reduce production.
When more workers are hired, the firm's output expands at an increasing rate only
a. when the law of diminishing returns is operative b. under conditions of noncompeting labor markets c. if each worker's MPP is positive d. when technology is improved e. when the gains from specialization of labor outweigh all other factors affecting labor productivity