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Major Field Test in Economics Sample Questions
... Firm X currently employs labor and capital such that the marginal product of capital is twice the marginal product of labor. If the price of a unit of labor is $8.00 and the price of a unit of capital is $4.00, Firm X can reduce costs while producing the same level of output by (A) (B) (C) (D) (E) ...
... Firm X currently employs labor and capital such that the marginal product of capital is twice the marginal product of labor. If the price of a unit of labor is $8.00 and the price of a unit of capital is $4.00, Firm X can reduce costs while producing the same level of output by (A) (B) (C) (D) (E) ...
Chapter 3
... sloping. This reflects the fact that additional workers are costly and alter average production due to the Law of Diminishing Returns. ...
... sloping. This reflects the fact that additional workers are costly and alter average production due to the Law of Diminishing Returns. ...
Micro chapter 25- presentation 2 Elasticity
... Elasticity of Resource Demand Cont’d • When Erd is greater than 1, resource demand is elastic • When Erd is less than 1, resource demand is inelastic • When Erd equals 1, resource demand is unit elastic ...
... Elasticity of Resource Demand Cont’d • When Erd is greater than 1, resource demand is elastic • When Erd is less than 1, resource demand is inelastic • When Erd equals 1, resource demand is unit elastic ...
Simultaneous equation systems in macroeconomic
... in the ‘Keynesian Cross’ model was exogenous, becomes an endogenous variable, since it depends on r which is now, itself, determined endogenously within the model. Thus whether a variable is endogenous or exogenous does not depend on what that variable is, rather it depends upon the nature of the mo ...
... in the ‘Keynesian Cross’ model was exogenous, becomes an endogenous variable, since it depends on r which is now, itself, determined endogenously within the model. Thus whether a variable is endogenous or exogenous does not depend on what that variable is, rather it depends upon the nature of the mo ...
Development and Structural Transformation: The Lewis Model
... Fact of life: agricultural production is limited by scarcity of land Industry and services not limited by any such fixed factor Technical progress and rising worker skills raise productivity in industry and services far more than in agriculture Hence development typically goes hand-in-hand with indu ...
... Fact of life: agricultural production is limited by scarcity of land Industry and services not limited by any such fixed factor Technical progress and rising worker skills raise productivity in industry and services far more than in agriculture Hence development typically goes hand-in-hand with indu ...
The Law of Supply - The Big L | James 1:2-4
... could not produce our maximum of 50 CD players, but we could only produce 45 CD players. However, we had to leave the prices the same. Which way would the supply curve shift? ...
... could not produce our maximum of 50 CD players, but we could only produce 45 CD players. However, we had to leave the prices the same. Which way would the supply curve shift? ...
Midterm Exam #3
... C) are only a few sellers. D) are many buyers and sellers. 29) With respect to redistribution, one reason "The Big Tradeoff" exists is because A) government policymakers must choose between funding the various programs. B) government programs only employ resources that had no value to society otherw ...
... C) are only a few sellers. D) are many buyers and sellers. 29) With respect to redistribution, one reason "The Big Tradeoff" exists is because A) government policymakers must choose between funding the various programs. B) government programs only employ resources that had no value to society otherw ...
Session17-MarketforFactorsofProduction
... Markets for the factors of production are like markets for goods & services, except: Demand for a factor of production is a derived demand – derived from a firm’s decision to supply a good in another ...
... Markets for the factors of production are like markets for goods & services, except: Demand for a factor of production is a derived demand – derived from a firm’s decision to supply a good in another ...
Aggregate Supply and Aggregate Demand and the Self
... 3. “When the price level falls, people’s wealth increases. When wealth increases, the real volume of consumption increases. Therefore, a decrease in the price level will cause the aggregate demand curve to shift to the right?” Do you agree with this statement? Explain. The price level is an endogeno ...
... 3. “When the price level falls, people’s wealth increases. When wealth increases, the real volume of consumption increases. Therefore, a decrease in the price level will cause the aggregate demand curve to shift to the right?” Do you agree with this statement? Explain. The price level is an endogeno ...
Chapter 15 Review Questions
... 1. Economic growth can be portrayed as a: A) outward shift of the production possibilities curve. B) inward shift of the production possibilities curve. C) movement from a point on to a point inside a production possibilities curve. D) movement from one point to another point on a fixed production p ...
... 1. Economic growth can be portrayed as a: A) outward shift of the production possibilities curve. B) inward shift of the production possibilities curve. C) movement from a point on to a point inside a production possibilities curve. D) movement from one point to another point on a fixed production p ...
EASTERN MEDITERRANEAN UNIVERSITY
... average and marginal cost of pipe? b. In long run equilibrium what will be the market equilibrium price and quantity for concrete pipe? How much will each firm produce? How much labor will be hired by each firm and in the market as a whole? ...
... average and marginal cost of pipe? b. In long run equilibrium what will be the market equilibrium price and quantity for concrete pipe? How much will each firm produce? How much labor will be hired by each firm and in the market as a whole? ...
Adam Smith*s Glorious Vision
... Critique of Equilibrium Approach • The “other things” that are assumed to remain equal – particularly social and political relations – change with economic outcomes. • They change in ways that lead to divergence, not equilibrium. Thems that gots gits. ...
... Critique of Equilibrium Approach • The “other things” that are assumed to remain equal – particularly social and political relations – change with economic outcomes. • They change in ways that lead to divergence, not equilibrium. Thems that gots gits. ...
Factors of Production
... • Production Function- illustrates the relationship between quantity of inputs & quantity of output • Marginal Product of Labor (MPL)- the increase in output from an additional unit of labor – MPL = Q/L or – MPL = (Q2 – Q1)/(L2 – L1) ...
... • Production Function- illustrates the relationship between quantity of inputs & quantity of output • Marginal Product of Labor (MPL)- the increase in output from an additional unit of labor – MPL = Q/L or – MPL = (Q2 – Q1)/(L2 – L1) ...
Key - Personal.psu.edu
... shock so that p = 5 (p was originally 0). Potential GDP (YP) falls to 9 (was 10). All else remains constant including AD. f) Resolve for the new level of output, Y, π, and r and label on all three diagrams as point(s) B. Y= 10.4 - .2 [2 + 1( Y - 9) + 5] Y(1 + .2) = 10 + 1.8 - 1 Y = 10.8 / (1 + .2).. ...
... shock so that p = 5 (p was originally 0). Potential GDP (YP) falls to 9 (was 10). All else remains constant including AD. f) Resolve for the new level of output, Y, π, and r and label on all three diagrams as point(s) B. Y= 10.4 - .2 [2 + 1( Y - 9) + 5] Y(1 + .2) = 10 + 1.8 - 1 Y = 10.8 / (1 + .2).. ...
Lecture notes 4 September 5 - 8: Specific Factors
... 13.When only PC rises, labor shifts from the food sector to the cloth sector and the output of cloth rises while that of food falls. 14.The wage rate (w) does not rise as much as PC since cloth employment increases and thus the marginal product of labor in that sector falls. Specific factors: Inelas ...
... 13.When only PC rises, labor shifts from the food sector to the cloth sector and the output of cloth rises while that of food falls. 14.The wage rate (w) does not rise as much as PC since cloth employment increases and thus the marginal product of labor in that sector falls. Specific factors: Inelas ...
Definition of Productivity and Factors Affecting It Page 1 of 1
... The question then is “What makes the difference between and economy where labor is highly productive and an economy where labor is less productive”. In the highly productive labor situation, this worker winds up, at the end of the day, with lots of goods and services, a rich economy. But if producti ...
... The question then is “What makes the difference between and economy where labor is highly productive and an economy where labor is less productive”. In the highly productive labor situation, this worker winds up, at the end of the day, with lots of goods and services, a rich economy. But if producti ...
classical
... We begin with a representative firm: The firm’s profit function is = PY – wN – Pr(K – K0) Maximize profit: Assume A=1, Y=F(N,K) and construct expressions for change in profit relative to changes in employment (N) and capital (K) and set to zero. ...
... We begin with a representative firm: The firm’s profit function is = PY – wN – Pr(K – K0) Maximize profit: Assume A=1, Y=F(N,K) and construct expressions for change in profit relative to changes in employment (N) and capital (K) and set to zero. ...
29 (b) Efficiency in Production
... In the following graph we see that, MPL is increasing upto 5 labor units. From 5 to 10 units is MPL is decreasing but positive. After 10 units of labor, MPL is negative. When the firm inputs less than 5 units of labor, it should continue to increase labor inputs because MPL is increasing, hence the ...
... In the following graph we see that, MPL is increasing upto 5 labor units. From 5 to 10 units is MPL is decreasing but positive. After 10 units of labor, MPL is negative. When the firm inputs less than 5 units of labor, it should continue to increase labor inputs because MPL is increasing, hence the ...
Chapter 9: Introduction to Economic Fluctuations
... Firms track price changes of their own product more closely than changes of the general price level. Perceptions of an increase in the “relative” price level causes the labor demand, employment, and output to rise. Let PW = price of wheat and P = general price level. With inflation, farmers perceive ...
... Firms track price changes of their own product more closely than changes of the general price level. Perceptions of an increase in the “relative” price level causes the labor demand, employment, and output to rise. Let PW = price of wheat and P = general price level. With inflation, farmers perceive ...
Chapter 25 Key Question Solutions
... information in all parts of the world with information seekers. New information products are often digital in nature and can be easily replicated once they have been developed. The start-up cost of new firms and new technology is high, but expanding production has a very low marginal cost, which lea ...
... information in all parts of the world with information seekers. New information products are often digital in nature and can be easily replicated once they have been developed. The start-up cost of new firms and new technology is high, but expanding production has a very low marginal cost, which lea ...
Aggregate Supply www.AssignmentPoint.com In economics
... An alternative model starts with the notion that any economy involves a large number of heterogeneous types of inputs, including both fixed capital equipment and labor. Both main types of inputs can be unemployed. The upward-sloping AS curve arises because (1) some nominal input prices are fixed in ...
... An alternative model starts with the notion that any economy involves a large number of heterogeneous types of inputs, including both fixed capital equipment and labor. Both main types of inputs can be unemployed. The upward-sloping AS curve arises because (1) some nominal input prices are fixed in ...
Fall 2015
... A. Carefully formulate the dynamic program that would be solved by a social planner in this economy. Be sure to be clear about the state variables and choice variables. B. Derive expressions that determine how the planner allocates a given amount of capital and labor across the two market sectors. P ...
... A. Carefully formulate the dynamic program that would be solved by a social planner in this economy. Be sure to be clear about the state variables and choice variables. B. Derive expressions that determine how the planner allocates a given amount of capital and labor across the two market sectors. P ...
Fei–Ranis model of economic growth
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The Fei–Ranis model of economic growth is a dualism model in developmental economics or welfare economics that has been developed by John C. H. Fei and Gustav Ranis and can be understood as an extension of the Lewis model. It is also known as the Surplus Labor model. It recognizes the presence of a dual economy comprising both the modern and the primitive sector and takes the economic situation of unemployment and underemployment of resources into account, unlike many other growth models that consider underdeveloped countries to be homogenous in nature. According to this theory, the primitive sector consists of the existing agricultural sector in the economy, and the modern sector is the rapidly emerging but small industrial sector. Both the sectors co-exist in the economy, wherein lies the crux of the development problem. Development can be brought about only by a complete shift in the focal point of progress from the agricultural to the industrial economy, such that there is augmentation of industrial output. This is done by transfer of labor from the agricultural sector to the industrial one, showing that underdeveloped countries do not suffer from constraints of labor supply. At the same time, growth in the agricultural sector must not be negligible and its output should be sufficient to support the whole economy with food and raw materials. Like in the Harrod–Domar model, saving and investment become the driving forces when it comes to economic development of underdeveloped countries.