How would you choose to estimate a production function for a single plant? How would you choose to estimate a production function for a number of firms in an industry? Explain
What will be an ideal response?
Estimating a production function for a single plant generally uses time-series analysis, because it is possible to know if technology and other variables have remained constant over time. To estimate a production function for a number of firms in an industry, it is customary to use cross-sectional analysis because it is unlikely that technology and other relevant factors have remained constant for all firms in the industry over time, and cross-sectional analysis removes this problem.
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What is meant by "gains from specialization"?
What will be an ideal response?
Suppose a firm has a Cobb-Douglas weekly production function Q = F(L, K) = 25L0.5K0.5, where L is the number of workers and K is units of capital. The wage rate is $900 per week, and a unit of capital costs $400 per week. What is the least-cost input combination for producing 675 units of output?
A. L = 18; K = 40.5 B. L = 40.5; K = 18 C. L = 27; K = 60.75 D. L = 27; K = 27
If (X ? IM) < 0, then capital inflows
a. will be zero. b. will be greater than zero. c. will be less than zero. d. can be zero, positive, or negative.
Consumers tend to accept the market restrictions imposed by suppliers because:
A. government prevents them from organizing. B. their costs of organizing are higher than the cost of the collusion by the suppliers. C. they see themselves as laborers and therefore benefit from restrictions. D. when combined, their losses are small for the group as a whole.