A farmer uses L units of labor and K units of capital to produce Q units of corn using a production function F(K,L). A production plan that uses K' = L' = 10 to produce Q' units of corn where Q' < F(10, 10 ) is said to be
A) technically feasible and efficient.
B) technically unfeasible and efficient.
C) technically feasible and inefficient.
D) technically unfeasible and inefficient.
E) none of the above
C
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Explain how changes in the stock of capital affect aggregate supply
The price elasticity of supply
a. is a number between 0 and 1. b. measures the percent change in quantity supply as a result of a 1-percent change in price c. measures the percent change in quantity supplied as a result of a 1-percent change in cost. d. measures the shift in supply as the result of a price change e. measures the movement of a supply curve along a fixed demand curve
The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, which of the following events could not explain this change?
a. Gerance experienced a reduction in unemployment. b. Gerance experienced an improvement in car-making technology. c. Gerance acquired more resources. d. Any of these events could explain the change.
The income effect of a price change is:
A. always consistent with the Law of Demand. B. never consistent with the Law of Demand. C. consistent with the Law of Demand only for normal goods. D. consistent with the Law of Demand only for inferior goods.