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).
The slope of the isoquant equals -MPL/MPK. To be concave, the slope of the isoquant becomes steeper as L increases. For this to be the case, MPL would have to increase more than MPK as labor increases and capital falls. That means the decrease in capital causes MPL to rise more than the increase in labor causes MPL to fall. The large inverse relationship implies that capital is replacing labor for this to be the case.
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A vast majority of mandatory federal spending is devoted to
A) entitlement programs. B) national defense. C) interest on the national debt. D) foreign aid.
Which factors determine the firm's elasticity of demand?
A) Elasticity of market demand and number of firms B) Number of firms and the nature of interaction among firms C) Elasticity of market demand, number of firms, and the nature of interaction among firms D) none of the above
Scarcity affects
A) only rich people. B) only poor people. C) only middle income people. D) all people.
Protecting infant industries from foreign competition may make sense, but only until the industry matures
a. True b. False Indicate whether the statement is true or false