One of the main differences between production processes among different parts of the world has to do with the quality of capital. Many development economists point out the fact that high-income countries usually have access to more and better capital than less-developed counties. What would be the effect of this difference in terms of isoquants used by high-income countries versus the isoquants used by low-income countries? Use an isoquant map in order to illustrate your answer.
What will be an ideal response?
In high income cases a small amount of capital substitutes for many workers and in the other case it takes many units of capital to do what a few workers can do. Clearly the first case will lead to higher productivity.
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Households increase the quantity of labor supplied when
A) the real wage rate increases. B) the real wage rate decreases. C) job opportunities increase. D) the nominal wage decreases and the price level rises. E) income taxes increase.
__________ bidders in a Treasury auction are guaranteed their bids at the __________ price resulting from the auction
A) Competitive; market-clearing B) Noncompetitive; highest C) Competitive; lowest D) Noncompetitive; market-clearing
The government sometimes creates an excess demand for a product by setting a maximum price at which the product may be sold to consumers. This is sometimes called a:
A. price ceiling. B. price floor. C. tax. D. subsidy.
Indifference curves that are thick violate
A) the assumption of transitivity. B) the assumption that more is better. C) the assumption of completeness. D) none of the assumptions.