Suppose the production function is q = 12 L0.25K0.75. Determine the long-run capital-to-labor ratio (K/L) if the cost a unit of capital (r) is three times the cost of a unit of labor (w)
What will be an ideal response?
The firm minimizes costs by setting MRTS = w/r. MRTS = MPL /MPLK = K/3L = w/r = 1/3. This firm will set K/L equal to one.
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. Which of the following gives Alice's best response function?
A. QA = 200 - 0.01QA B. QA = 100 - 0.005QK C. QA = 2,000 - 0.5QK D. QA = 2,000 - 0.5QA
Special interest group A receives a 1/10,000th slice of the economic pie (Real GDP). It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be ________________ times larger than the _________________
A) 1,000; transfer B) 10,000; transfer C) 100; transfer D) 10,000; transfer minus $1,000 E) 1,000; transfer; minus $10,000
A country could correct a balance-of-payments surplus by
A. Expansionary fiscal policy. B. Contractionary monetary policy. C. Decreasing the money supply. D. Increasing tariffs on imported goods.
What was the primary reason that Congress initiated deposit insurance in the 1930s?
A) protect the deposits of individual savers B) provide more of an incentive for depositors to monitor bank activities C) reduce systemic risk to the financial system D) reduce information problems in the banking system