Draw a production function and illustrate the effects of capital investment and technological improvement on labor productivity.
What will be an ideal response?
A production function is drawn with the hours of labor input on the horizontal axis and the amount of output on the vertical axis. The production function is an upward-sloping line from the origin. As capital stock growth occurs or technological improvement takes place, the production function shifts upward. Therefore, more output is obtained from the same amount of labor input. This is the definition of increasing labor productivity: more output with the same quantity of labor input.
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Which of the following describes an external benefit resulting from an individual's purchase of a winter flu shot? a. A flu shot is less expensive than the cost of treatment when you get the flu
b. The income of doctors increases when you get a flu shot. c. A flu shot reduces the likelihood that others will catch the flu from you. d. A flu shot reduces the likelihood that you will miss work as a result of sickness, and, therefore, you will earn more income.
A patent
a. tends to discourage further innovation, since there are no other competitors to "push" the patentee b. prevents anyone else from buying the same discovery or product for twenty years c. grants exclusive rights over the protected firm for at least fifty years d. is an infringement against an exclusive business right e. prevents anyone else from selling the same discovery or product for twenty years
Which of the following was not a lesson from the 2007-2009 financial crisis?
a. Financial regulations were too "light" prior to the crisis. b. Excessive complexity made the financial system more fragile and dangerous. c. Both monetary policy and fiscal policy are needed in order for the economy to recover. d. Regulatory failures were based primarily on poor job performance.
The largest source of federal revenue in the United States is:
a. Social insurance tax b. the corporate income tax c. the individual income tax d. Foreign aid to the U.S.