Macroeconomics
Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 10, Problem 3SPA

(a)

To determine

The technologically efficient method.

(b)

To determine

The economically efficient method.

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Refer to Ch. 6, Fig. 6.2 (The Effect of Technological Improvement) and Example 6.2 (Malthus and the Food Crisis) Malthus believed that the world's limited amount of land would not be able to supply enough food as the population grew. As a result there would be mass hunger and starvation. But Malthus was proved wrong! Explain why Malthus' prediction about mass hunger and starvation did not come to pass.
1.  Briefly explain what the term "agglomeration economies" refers to and briefly describe what the fundamental reason for the development of this particular type of economy relates to. Provide two examples of factors associated with agglomeration economies and identify what these factors help to explain. Identify two factors that would lead to diseconomies and briefly explain how the future of many of the world's cities will be likely be determined.   2.  Describe the concept of diminishing returns in production.  Explain why diminishing returns occurs.
In 1939, the box office records set by Gone with the Wind and The Wizard of Oz proved to Hollywood studios that investing in Technicolor was worth every penny. Nevertheless, a reversal of fortune hit the film industry as the United States entered World War II. Wartime shortages made celluloid nitrate more costly, so Hollywood studios reverted to primarily black and white. The few Technicolor musicals released only recovered their production costs. The graph shows Metro-Goldwyn-Mayer's (MGM) production of Technicolor movies before World War II. Modify the graph to describe the wartime period for MGM. Assume that nothing changes except the items discussed in the question.
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