The marginal rate of technical substitution at any particular labor-capital bundle is
A. the wage relative to the cost of capital.
B. the ratio of labor to capital.
C. the slope of the isoquant.
D. the slope of the indifference curve.
E. the average product of labor relative to the average product of capital.
Answer: C
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Workers earn more than half of the income generated by the production process.
Answer the following statement true (T) or false (F)
When you have an omitted variable problem, the assumption that E(ui Xi) = 0 is violated. This implies that
A) the sum of the residuals is no longer zero. B) there is another estimator called weighted least squares, which is BLUE. C) the sum of the residuals times any of the explanatory variables is no longer zero. D) the OLS estimator is no longer consistent.
Sue's Bagel Shop wants to estimate how responsive the demand for bagels is to a change in her cream cheese prices. To accomplish this task, the following data would not be needed:
a. percentage change in bagel prices b. original price of cream cheese c. new quantity of bagels sold d. original quantity of bagels sold e. new price of cream cheese
The demand curve for labor will shift whenever
A. the marginal factor cost changes. B. demand for the final product changes. C. the supply of labor changes. D. the wage rate changes.