Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
14th Edition
ISBN: 9781337198196
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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True or false
The law of diminishing returns implies that the marginal product of labor (MPL) is increasing as labor input increases.
Which of the following is an example of a physical capital investment for a manufacturing company?
A Hiring floor technicians
B
D
Purchasing acres of land for construction
Buying new machines for production
Hiring accountants
Resource specialization and division of labor cause
the marginal product of labor to increase, but only
for a time.
Group of answer choices
True
False
Chapter 7 Solutions
Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
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- An increase in the price of capital will demand for labor if capital and labor are substitutes, and it will the demand for labor if the scale effect dominates. increase; decrease decrease; increase increase; increase decrease; decreasearrow_forwardA production function is represented by P=f(L), where L is labour. As input L increases, the total output will increase but what will happen to marginal product? Can marginal product be zero? if so, what it meanarrow_forwardThe 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_forward
- Technological progress decreases the marginal product of labor if a new input is developed that is complementary with labor. True Falsearrow_forwardIf the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 isarrow_forwardTwo points, A and B, are on an isoquant drawn with labor on the horizontal axis and capital on the ver- tical axis. The capital-labor ratio at B is twice that at A, and the elasticity of substitution as we move from A to B is 2. What is the ratio of the MRTSL, K at A versus that at B?arrow_forward
- Does additional input of labor entail a steady increase in the output of a firm? Why or Why not?arrow_forwardAssuming 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?arrow_forwardQuadratic Production Function Estimate a quadratic production function where Q = output; L = labour input; K = capital input. Is the estimated production function “good”? Why or why not? Cobb-Douglas Production Function Estimate the Cobb-Douglas production function Q= ¼ αLβ1Kβ2, where Q = output; L = labour input; K = capital input; and α, β1, and β2 are the parameters to be estimated. For the Cobb-Douglas production function, test whether the coefficients of capital and labor are statistically significant. For Cobb-Douglas production function, determine the percentage of the variation in output that is explained by the regression equation. For Cobb-Douglas production function, determine the labor and capital estimated parameters, and give an economic interpretation of each value. Determine whether this production function exhibits increasing, decreasing, orconstant returns to scale. (Ignore the issue of statistical significance.)arrow_forward
- Find the optimal solution to capital (K) and labour (L) given the function F(K,L) = AK^(t)(alpha)L^(t(1-alpha))arrow_forwardONLY ANSWER C & D Consider a firm with Total Output function (Production Function) given by Q = 6L2 – 0.4L3, where L is variable labor input. The firm is faced with the decision to hire the optimal number of workers in order to maximize its output level. (a) Obtain the Marginal Product function. (b) Find the Average Product function. (c) Determine the level of employment that would maximize the firm’s output level. (d) Verify that the second-order condition is met for the firm's output maximum.arrow_forwardCobb-Douglas Production Function 1. Estimate the Cobb-Douglas production function Q ¼ αLβ1Kβ2, where Q = output; L = labour input; K = capital input; and α, β1, and β2 are the parameters to be estimated. 2. For the Cobb-Douglas production function, test whether the coefficients of capital and labour are statistically significant. For Cobb-Douglas production function, determine the percentage of the variation in output that is explained by the regression equation. 3. For Cobb-Douglas production function, determine the labour and capital estimated parameters and give an economic interpretation of each value. 4. Determine whether this production function exhibits increasing, decreasing, or constant returns to scale. (Ignore the issue of statistical significance.arrow_forward
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