Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 22, Problem 3.3P
To determine
Possibilities in the short or long run growth.
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Alice runs a shoemaking factory that utilizes both labor and capital to make shoes. Which of the following would shift the factory’s demand for capital? You can select one or more answers from the choices shown a. Many consumers decide to walk barefoot all the time. b. New shoemaking machines are twice as efficient as older machines. c. The wages that the factory has to pay its workers rise due to an economy-wide labor shortage.
Which of the following statements are true?
A basic assumption of the theory of production is that:
A firm cannot borrow money to finance its input expenditures.
A firm can buy as much labor and capital as it desires in the long-run
A firm can reduce the number of workers it uses, but it cannot adjust how much capital it uses in the short-run
When the marginal product of labour starts falling, the firm must cease production
a. II only
b. II and III
c. I, III and IV
d. II, III and IV
Suppose that the table presented below shows an economy's relationship between real output and the inputs needed to produce that
output:
Input Quantity
Real GDP
150.0
$400
112.5
300
75.0
200
Instructions: Enter your responses answers rounded to 2 decimal places.
a. What is the level of productivity in this economy?
b. What is the per-unit cost of production if the price of each input unit is $2?
2$
C. Assume that the input price increases
production?
$2 to $3 wit
no accompanying change in productivity. What
the new per-unit cost of
2$
In what direction would the $1 increase in input price push the economy's aggregate supply curve?
(Click to select) V
What effect would this shift of aggregate supply have on the price level and the level of real output?
O The price level would decrease and real output would remain the same.
O The price level would increase and real output would decrease.
O Both the price level and real output would remain the same.
O The price level would decrease and…
Chapter 22 Solutions
Principles of Economics (12th Edition)
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- Which of the following statements about capital are correct? a) In economic jargon capital is the net worth of a business enterprise. b) Capital is defined as anything that is produced that then produces other things c) An increase in capital will grow the economy because capital is a resource in the production process and an increase in resources increases the production possibilities or potential production of the economy. d) Capital represents the tools that labor uses and thus an increase in capital tends to increase the productivity of labor (and possibly other resources) and that magnifies economic growth. e) Most technological advances involve improvements to the tools of production, which is capital, so embodiment of new technology in capital is yet another way capital fosters economic growth. f) increasing capital in the economy has to lead to greater income inequality, since most capital is owned by the rich.…arrow_forwardSuppose that the table presented below shows an economy's relationship between real output and the inputs needed to produce that output: Input Quantity Real GDP 150.0 $400 112.5 300 75.0 200 Instructions: Enter your responses answers rounded to 2 decimal places. a. What is the level of productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? C. Assume that the input price increases from $2 to $3 with no accompanying change in productivity. What is the new per-unit cost of production? In what direction would the $1 increase in input price push the economy's aggregate supply curve? (Click to select) What effect would this shift of aggregate supply have on the price level and the level of real output? O The price level would decrease and real output would remain the same. O The price level would increase and real output would decrease. O The price level would decrease and real output would increase. O Both the price level and real…arrow_forwardWhat is the economic meaning of the powers of K and L? Briefly explain. What is the level of output ? produced when the economy in long-run equilibrium.arrow_forward
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