Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 7, Problem 1.2CE
To determine
To evaluate whether the coefficient of capital and labor are statistically significant.
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Is it possible to increase the labor productivity (output per unit of labor) in a given production process which exhibits diminishing returns to labor? If so, how?
Assuming labor is the only variable factor and paid at a constant wage rate ? show that the average variable cost (AVC) is inversely related to productivity?
. Determine the average products of capital (K) and labour (L)
Chapter 7 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- The Production Function assumes that the marginal product of capital is always increasing all workers are different the level of capital stock is not measurable all workers are alikearrow_forwardLet be a production function. The average product of factor L (labour force) is equal to:arrow_forwardTechnological progress decreases the marginal product of labor if a new input is developed that is complementary with labor. True Falsearrow_forward
- Explain the difference between diminishing total returns and diminishing marginal returns to labor.arrow_forwardFind the optimal solution to capital (K) and labour (L) given the function F(K,L) = AK^(t)(alpha)L^(t(1-alpha))arrow_forwardGive an example of a Cobb–Douglas production function.What is the marginal productivity of labor? Of capital?arrow_forward
- Holding the output of stereo sets constant, a large increase in the use of the input capital will cause the labour input to increase proportionately to capital. True or False?arrow_forwardA mathematical expression of the relationship between inputs and outputs is referred to as _____________________________. production function marginal product curve function relationarrow_forwardConsider the following equation:Y = F (K, AN)Based on this equation, explain the concepts of ‘constant returns to scale’ and decreasing ‘returns to effective labour and capital’.arrow_forward
- Suppose a firm has a Cobb-Douglas production function given by: Q = A * L^0.5 * K^0.5 If the firm currently employs 100 units of labor and 64 units of capital and produces 500 units of output , can you calculate the value of the total factor productivity for this firm?arrow_forwardWhen production function of a firm is Q = 20K^0.5L^0.5 , price of capital is 5 per unit and price of labour is 4 per unit . What will be the expansion path ratio for the firm?arrow_forwardWhy does the learning curve apply mainly to direct rather than indirect labor?arrow_forward
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