Always Round Tire has a production function of Q = 300 L.75 K.5. In the short run, if L = 250 and K = 25, what is the quantity of tires supplied? What happens to the output of tires if L jumps to 300 and then 350? What law does this illustrate?
What will be an ideal response?
When L=250 and K=25, then Q=94,307. When L increases to 300, Q increases to 108,127. When L increases to 350, Q increases to 121,379. This shows the effects of diminishing marginal returns to labor as a factor of production.
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An engineer has informed the city manager that the marginal cost of an additional car crossing the city bridge is zero? If you were required to draw this cost function on a graph what would it look like? What is the slope of this graph?
What will be an ideal response?
If the current price of a bond is greater than its face value
A) an investor will receive a capital gain by holding the bond until maturity. B) the yield to maturity must be less than the coupon rate. C) the coupon rate must be less than the current yield. D) the coupon rate must be equal to the current yield.
The difference between gross public debt and net public debt is that
A. net public debt is expressed in real terms while gross public debt is expressed in nominal terms. B. gross public debt is held by individuals while net public debt is held by the government. C. gross public debt includes interagency borrowing while net public debt does not. D. net public debt includes interagency borrowing while the gross domestic product debt does not.
Suppose the consumer's income increases while the prices of the goods remain constant. Then the
A) budget constraint shifts outward parallel to the original budget constraint. B) indifference curves become flatter. C) budget constraint shifts inward parallel to the original budget constraint. D) indifference curves shift outward away from the origin.