PPF – what does this abbreviation stand for and what does this mean and describe it briefly?Also describe each component of the given production function P(L,K) = BLa Kb
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- 37. Which of the following is the interpretation of production function Y = F (K, L)? a.Output depend on K and L b.If K Increases, L also needs to increase c.If K increases, L needs to decrease d.If K and L Increases Y increases as wellConsider the production function Y = z * K^1/3 * N^1/3 * L^1/3 where Y is output, z is a parameter capturing technology, K is capital, N is labour and L is the area of land. Question text If we double the technology factor, z, then output will double. Question 17Select one: True False Question text If we increase the population, and therefore the workforce, then if nothing else changes, the average product of labour must increase. Question 18Select one: True False Question text We would need to increase capital input by a factor of 8 to double output. Question 19Select one: True False Question text Increasing technology will increase labour productivity. Question 20Select one: True FalseBased on your understanding, does additional input of Labor entails a steady increase in the output of a firm? Why or Why not? Support your answer using the concept of production
- Is it possible to increase the labor productivity in a given production process which exhibits diminishing returns to labor? If so, how? Explain with a graphThe aggregate production function is y=3KL. If they are 30 units of capital and 40 units of labor, what is aggregate output?True or False A production function in "economics" summarizes the technological relationship between inputs and outputs.
- Suppose the production function is Y = f(K, AN) and the economies of scale are invariant . When will output increase by 7% at a given skill level ? Please choose one. N and A increase by 7% each . K and AN increase by 7% each . N or A increases by 7% . Increases K or AN by 7%The following graph shows a variety of possible production functions (PFs) in an imaginary economy, assuming constant levels of human capital and capital stock. Because human capital and capital stock remain unchanged, each of these production functions represents a different level of the technology. The slope of the line connecting the origin to point A is _______ (options: steeper, flatter) than the slope of the line connecting the origin to point B, because the slope of such a line is equivalent to __________ (options: the marginal physcial product of labor, marginal cost, productivity).The graph below represents per-worker production functions for the same country. Answer the following questions using this graph. Which 1 concept explains that the area between B and C has a flatter slope than the area between A and B? Answer: Law of Diminishing Marginal Returns What has to happen for a country to move from point E to B to D? Answer: The movement through which 3 points (out of 5 given) would indicate the largest increase in productivity? Answer:
- What’s the formal name for the A_bar parameter in the production model we study? A. Average GDP B. Total factor productivity C. Per capita GDP D. Per capita capitalThe following graph shows a variety of possible production functions (PFs) in an imaginary economy, assuming constant levels of human capital and technology. Because human capital and technology remain unchanged, each of these production functions represents a different level of the capital stock. Fill in the blank: The slope of the line connecting the origin to point C is __________ (options: flatter, steeper) than the slope of the line connecting the origin to point B, because the slope of such a line is equivalent to ___________ (options: productivity, the marginal physical product of labor, marginal cost).David Ricardo ([1817] 1965) modified Smith’s model by introducing diminishing returns to land cultivation. Diminishing returns implies that as you apply more of a variable input (labor) to a fixed input (land), the productivity of each additional worker will eventually decline as long as technology isfixed. He claimed that land was of variable quality and finite. Thus, as an economy grows, population grows relative to land, and the productivity of the labor on the land will decline. According to Ricardo, the only way stagnation could be averted, at least temporarily, would be through the trade and imports of cheap food or wage goods. The essential doctrines of John Stuart Mill (1848) differed little, if at all, from those of Ricardo. He, like Smith, believed in the doctrine of laissez-faire , but he also recognized the possibility of modifying the system. He displayed a leaning to the socialist ideal, growing closer as his life advanced. He believed that we should sacrifice economic…