Which of the following is true?
A. A functional form misspecification can occur if the level of a variable is used when the logarithm is more appropriate.
B. A functional form misspecification occurs only if a key variable is uncorrelated with the error term.
C. A functional form misspecification does not lead to biasedness in the ordinary least squares estimators.
D. A functional form misspecification does not lead to inconsistency in the ordinary least squares estimators.
Answer: A
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If the marginal rate of technical substitution of labor for capital (MRTSLK) exceeds the relative price of labor in terms of capital (PL/PK), then
a. the firm's long-run average cost curve is rising. b. the firm is producing its output at the least possible cost, but the firm should reduce its output level to increase its profits. c. the firm has increased its output level beyond the point of diminishing marginal returns. d. the firm needs to use less capital and more labor to reach its expansion path.
Let's assume producers in Canada can make 200 units of beef or 50 units of oranges, and U.S. producers can make 50 units of beef or 200 units of oranges per time period. Producers in which nation have an incentive to specialize in beef production?
A) The U.S. B) Canada C) Both of the above have an incentive to specialize in beef production. D) Neither of the above have an incentive to specialize in beef production.
For the monopoly shown in the figure above, the profit maximizing output is
A) 4 units per day. B) 5 units per day. C) 6 units per day. D) 10 units per day.
Public goods are not normally characterized by the following:
a. externalities b. market provision c. the free rider problem d. non-exclusion e. all the above characterize public goods