Assume that a very unusual production process involves increasing marginal productivity that appears to have no end. What would the total productivity function look like? Comment on the likelihood of such a function in the real world
What will be an ideal response?
The total product function would be upward-sloping and would be increasing at an increasing rate. In other words, the slope would keep getting progressively steeper as more labor is added. That doesn't seem plausible in the real world because what we generally see is either constant marginal product or diminishing marginal product.
You might also like to view...
In comparison with a perfect competition, a single-price monopolist with the same costs creates a ________ consumer surplus and makes a ________ economic profit
A) smaller; larger B) smaller; smaller C) larger; larger D) larger; smaller
You observed last week that the price of organic tomatoes in Ames was $4 per pound and that the total quantity of organic tomatoes consumed in Ames was 50 pounds. This week, you observe the price of organic tomatoes increased to $5 per pound and consumption decreased to 30 pounds. What is the elasticity of demand for organic tomatoes?
A. -2 B. -1.6 C. -1 D. -0.625
Product differentiation
A) may allow firms to price above a competitive level. B) generates value as consumers value more choices. C) depends on perceived differences between products. D) All of the above.
The rational expectations hypothesis assumes that people know the "true model" of the economy and form their expectations of the future based on this model.
Answer the following statement true (T) or false (F)