Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the production function has constant returns to scale
What will be an ideal response?
When L = L1 and K = K1, q = q1. Let L2 = m ? L1 and K2 = m ? K1 so that both L and K have increased by the same proportion. Then, q2 = (m ? L1)0.25 (m ? K1)0.75 = m0.25+0.75 L10.25 K10.75 = m ? q1. Thus, for any m, output changes by the same proportion that the inputs changed.
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A) elephants in the wild B) lions in a zoo C) public transportation D) a college education
As a result of the government procurement policy in the U.S.:
a. the domestic consumers are required to pay a higher price than the government for the domestically produced goods. b. the government wields the sole authority of importing goods from abroad. c. the government wields the sole authority of exporting goods. d. the government is required to buy the domestic goods if the domestic price is less than the world price. e. the government is required to sponsor research and development for the domestic firms.
Conventional budget accounting practices tend to overstate deficits in inflationary periods because they
a. ignore the inflation tax. b. confuse repayment of principal with real interest expenditures. c. double count some expenditures. d. understate real interest rates.
Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door. Since the opening of Kerrie's Off-Key Karaoke, the opportunity cost of playing skeeball at Skeeter's has
A) decreased. B) not changed. C) fallen to zero. D) increased.