Exam 4: A Model of Production

Figure 4.4: Labor Market -In Figure 4.4, MPL represents the labor ________, represents the labor ________, and the intersection of the two yields the ________.

The production function describes how ________ can be combined to generate output.

Convert the Cobb-Douglas production into per capita terms. Why might we be more concerned about per capita output rather than total output when discussing the welfare impacts of economic growth?

A production function exhibits constant returns to scale when you:

The solution to the firm's maximization problem is how much:

As an economist working at the International Monetary Fund, you are given the following data for South Africa: predicted per capita GDP, relative to the United States, as given by , is 0.55, and total factor productivity is 0.33. What is the observed per capita GDP, relative to the United States?

As an economist working at the International Monetary Fund, you are given the following data for Brazil: predicted per capita GDP, relative to the United States, as given by , is 0.56, and total factor productivity is 0.36. What is the observed per capita GDP, relative to the United States?

The influences of institutions on economic performance can be easily contrasted using:

Differences in output across economies with the same per capita capital stock can be explained by:

If MPK $\gt$ r, the firm:

You are an economist working for the International Monetary Fund. Your boss wants to know what the total factor productivity of India is, but all you have is data on per capita GDP, y, and the per capita capital stock, k. If you assume that capital's share of GDP is one-fourth, what would you use to find total factor productivity?

The two main inputs we consider in our production function model are labor and land.

Figure 4.6: Production Function -Consider the two production functions in Figure 4.6, representing two countries. Which of the following is true? i. At points a and b, each country has the same per capita capital stock but different factor Productivity. ii. Points a and c represent the same country but with different factor productivity. iii. Points b and d represent the same country but with different stock of per capita capital.

If and , then output is determined by:

Exogenous variables are predetermined by the model builder.

Consider two countries, A and B. If each country produces using identical production functions, but y_A = y_B and k_A =k_B, the total factor productivity of country A equals that of B.

In the Cobb-Douglas production function , labor's share of GDP is:

In the equation , the "bars" over the A and K mean they are:

Which of the following are we likely going to want to explain with an economic model? i. Why people in the United States are 50 times richer than Ethiopians. ii. What causes economic growth. iii. What we think politicians should do with taxes.

Refer to the following table when answering the following questions. Table 4.1: Production Model's Prediction for Per Capita GDP (US = 1) (Source: Penn World Tables 9.0) -One explanation for the difference between the predicted output per person and the observed per capita GDP in Table 4.1 is differences in: