Question 1

In a production function where capital (K)is raised to the power 0.3 and labour (N)is raised to the power 0.7

Accepted Answer

A) the production function relating output and labour is not as sharply bowed as the production function relating output and capital. 
B) the production function relating output and labour is as sharply bowed as the production function relating output and capital. 
C) the production function relating output and capital is not as sharply bowed as the production function relating output and labour. 
D) the production function relating output and capital is bowed,but the production function relating output and labour is not bowed.

Question 2

In the production function Y = AF(K,N),A is ________,K is ________,and N is ________.

Accepted Answer

A) total factor productivity;the capital stock;the number of workers employed 
B) total factor productivity;investment;the number of workers employed 
C) the productivity of labour;the capital stock;the size of the labour force 
D) the productivity of labour;investment;the size of the labour force

Question 3

The two main characteristics of the production function are

Accepted Answer

A) it slopes downward from left to right,and the slope becomes flatter as the input increases. 
B) it slopes upward from left to right,and the slope becomes steeper as the input increases. 
C) it slopes upward from left to right,and the slope becomes flatter as the input increases. 
D) it slopes downward from left to right,and the slope becomes steeper as the input increases.

Question 4

The principle of diminishing marginal productivity of capital implies that

Accepted Answer

A) output will diminish as capital increases. 
B) output will increase first,but it will decrease as capital increases. 
C) output will increase at diminishing rate as capital increases. 
D) output will decrease first,but it will increase as capital increases.

Question 5

Economists often treat the economy's capital stock as fixed because

Accepted Answer

A) labour is a more important factor of production than capital,so economists ignore capital. 
B) it takes a long time for new investment and the scrapping of old capital to affect the overall quantity of capital. 
C) there is very little capital in the economy compared to the amount of labour. 
D) unless the interest rate changes,the capital stock doesn't change.

Question 6

The marginal product of capital

Accepted Answer

A) is measured by the slope of the line tangent to the production function relating output and capital. 
B) is larger when the capital stock is relatively larger. 
C) is smaller when the capital stock is relatively smaller. 
D) displays diminishing marginal productivity only when the capital stock is small.

Question 7

A favourable supply shock,such as a fall in the price of oil,would

Accepted Answer

A) cause firms to demand less labour at any given real wage. 
B) cause the labour demand curve to shift to the left. 
C) increase the marginal product of labour. 
D) decrease the real wage.

Question 8

The marginal product of labour (measured in units of output)for New Age Nirvana is given by MPN = A(200 - N)where A measures productivity and N is the number of labour hours used in production.Assume that the price of output is $3 per unit and the demand for labour is 195.What will be the level of productivity if the nominal wage is $30?

Accepted Answer

A) 5 
B) 10 
C) 2 
D) 12

Question 9

An increase in the real wage will cause an individual to increase his or her supply of labour if

Accepted Answer

A) the substitution effect is greater than the income effect. 
B) the income effect is greater than the substitution effect. 
C) the substitution effect is equal to the income effect. 
D) the substitution effect is negative and the income effect is positive.

Question 10

The real wage is measured by

Accepted Answer

A) the difference between the nominal wage rate and the inflation rate. 
B) the difference between the nominal wage rate the interest rate. 
C) the ratio of nominal wage and price level. 
D) the wage rate divided by the inflation rate.

Question 11

What is the effect of immigration to Canada on GDP? Demonstrate the effects using the production function.

Accepted Answer

The answer of What is the effect of immigration to...

Question 12

In a graph of the production function relating output to capital,it is NOT true that

Accepted Answer

A) labour supply increases as capital increases. 
B) the marginal product of capital can be measured as the slope of the production function. 
C) the marginal product of capital falls as the capital stock increases. 
D) the shape of the production function reflects diminishing marginal productivity.

Question 13

In WORKLAND,the marginal product of labour (MPN)is given by MPN = 100 - N,where N is the amount of labour used,and the labour supply by NS = 10 + 5w + 2T,where w is the real wage and T is a lump-sum tax.What is the equilibrium real wage in WORKLAND,if T = 21?

Accepted Answer

A) 6 
B) 10 
C) 8 
D) 5

Question 14

The female participation rate in Canada has been increasing since the 1960s.This implies that,other things being equal,

Accepted Answer

A) the aggregate labour supply curve has shifted leftward. 
B) the aggregate labour supply curve has shifted rightward. 
C) the aggregate labour demand curve has shifted leftward. 
D) the aggregate labour demand curve has shifted rightward.

Question 15

Suppose that in 2002 Freedonia had GDP equal to 2000 million,the capital stock was equal to 1700 million,the number of employees equaled 70 million.The production function is Y = AK⁰.²⁵ᴺ⁰.⁷⁵.Total factor productivity of the economy in that year was approximately equal to

Accepted Answer

A) 0.09. 
B) 2.61. 
C) 4.19. 
D) 12.87.

Question 16

Which one of the following is true?

Accepted Answer

A) The marginal product of capital is positive but declining as the capital stock increases. 
B) The marginal product of capital is positive and increasing as the capital stock increases. 
C) The marginal product of capital is negative and declining as the capital stock increases. 
D) The marginal product of capital is negative but rising as the capital stock increases.

Question 17

The fact that the production function relating output to labour becomes flatter as we move from left to right means that

Accepted Answer

A) the marginal product of labour is positive. 
B) the marginal product of capital is positive. 
C) there is diminishing marginal productivity of labour. 
D) there is diminishing marginal productivity of capital.

Question 18

Dutch disease may be evident in Canada because

Accepted Answer

A) Canada is a resource-based economy and does not have a strong manufacturing industry. 
B) inflation increases when oil prices rise. 
C) the Canadian dollar appreciates with higher oil prices. 
D) Canada is a major oil-exporting country.

Question 19

An individual's labour supply curve might shift to the right because

Accepted Answer

A) an increase in the future real wage leads to a decrease in the amount of labour supplied. 
B) a decrease in wealth leads to an increase in the amount of labour supplied. 
C) a decrease in the future real wage leads to a decrease in the amount of labour supplied. 
D) an increase in wealth leads to a decrease in the amount of labour supplied.

Question 20

One reason that firms hire labour at the point where w = MPN is

Accepted Answer

A) if w  MPN,the cost (w)of hiring additional workers is less than the benefits (MPN)of hiring them,so they should hire more workers. 
C) if w  MPN,the cost (w)of hiring additional workers exceeds the benefits (MPN)of hiring them,so they should hire fewer workers.

Exam 3: Productivity, output, and Employment

In a production function where capital (K) is raised to the power 0.3 and labour (N) is raised to the power 0.7

In the production function Y = AF(K,N) ,A is ,K is ,and N is .

The two main characteristics of the production function are

The principle of diminishing marginal productivity of capital implies that

Economists often treat the economy's capital stock as fixed because

The marginal product of capital

A favourable supply shock,such as a fall in the price of oil,would

An increase in the real wage will cause an individual to increase his or her supply of labour if

The real wage is measured by

What is the effect of immigration to Canada on GDP? Demonstrate the effects using the production function.

In a graph of the production function relating output to capital,it is NOT true that

In WORKLAND,the marginal product of labour (MPN) is given by MPN = 100 - N,where N is the amount of labour used,and the labour supply by NS = 10 + 5w + 2T,where w is the real wage and T is a lump-sum tax.What is the equilibrium real wage in WORKLAND,if T = 21?

The female participation rate in Canada has been increasing since the 1960s.This implies that,other things being equal,

Suppose that in 2002 Freedonia had GDP equal to 2000 million,the capital stock was equal to 1700 million,the number of employees equaled 70 million.The production function is Y = AK⁰.²⁵ᴺ⁰.⁷⁵.Total factor productivity of the economy in that year was approximately equal to

Which one of the following is true?

The fact that the production function relating output to labour becomes flatter as we move from left to right means that

Dutch disease may be evident in Canada because

An individual's labour supply curve might shift to the right because

One reason that firms hire labour at the point where w = MPN is

Exam 3: Productivity, output, and Employment

In a production function where capital (K) is raised to the power 0.3 and labour (N) is raised to the power 0.7

In the production function Y = AF(K,N) ,A is ________,K is ________,and N is ________.

The two main characteristics of the production function are

The principle of diminishing marginal productivity of capital implies that

Economists often treat the economy's capital stock as fixed because

The marginal product of capital

A favourable supply shock,such as a fall in the price of oil,would

An increase in the real wage will cause an individual to increase his or her supply of labour if

The real wage is measured by

What is the effect of immigration to Canada on GDP? Demonstrate the effects using the production function.

In a graph of the production function relating output to capital,it is NOT true that

In WORKLAND,the marginal product of labour (MPN) is given by MPN = 100 - N,where N is the amount of labour used,and the labour supply by NS = 10 + 5w + 2T,where w is the real wage and T is a lump-sum tax.What is the equilibrium real wage in WORKLAND,if T = 21?

The female participation rate in Canada has been increasing since the 1960s.This implies that,other things being equal,

Suppose that in 2002 Freedonia had GDP equal to 2000 million,the capital stock was equal to 1700 million,the number of employees equaled 70 million.The production function is Y = AK⁰.²⁵ᴺ⁰.⁷⁵.Total factor productivity of the economy in that year was approximately equal to

Which one of the following is true?

The fact that the production function relating output to labour becomes flatter as we move from left to right means that

Dutch disease may be evident in Canada because

An individual's labour supply curve might shift to the right because

One reason that firms hire labour at the point where w = MPN is

In the production function Y = AF(K,N) ,A is ,K is ,and N is .