Exam 3: Aggregate Production and Productivity

In an economy with production function Y = 1.5 × K0.3L0.7, K = 343, and L = 512. If factor markets are in equilibrium, then the rental price of capital is (approximately) ________, and the real wage is (approximately) ________.

Which of the following is true about labor productivity?

If country X has a higher capital per person than country Y, then ________.

Which of the following is true about total factor productivity (TFP)?

Which of the following is true about labor productivity?

If the quantities of labor and capital in an economy each increase by the same x percent, which of the following will increase by x percent?

To get the first order conditions in a profit maximization problem, we must ________.

Profit maximization implies that firms will want to ________.

To analyze aggregate productivity, economists typically assume ________.

Consider an economy in which 350 = 3 × 7000.3L0.7. Calculate the long-run equilibrium values of factor prices and incomes.

As firms use more and more of an input, ________.

The main cause of low per capita income is ________.

Since the 1980s, China's output per person has increased tremendously. Which of these possible contributors to economic growth in China is a good example of a positive supply shock?

The marginal product of labor indicates ________. Therefore the MPL curve is also ________.

Using the Cobb-Douglas production function, while holding other inputs constant, if the amount of a specific factor is increasing ________.

Capital per person k is higher in Japan than in the United States. As a result ________.

What does the Cobb-Douglas production function assume about the input shares in the economy?

As an investor, negative supply shocks are not attractive because ________.

Assume that an economy is in equilibrium when there occurs an increase in the supply of capital. The available quantity of labor remains fixed. Once the economy has adjusted to its new equilibrium, which of the following has increased?

Which of the following is an example of an adverse supply shock?