Suppose labor's share of output is 60% and capital's share of output is 40%. If labor grows at a rate of 5%, then this will cause output to grow at a rate of [ %. If capital grows at a rate of 5%, then this will cause output to grow at a rate of %. Instructions: Enter whole numbers into each box.

You run a factory that uses pottery wheels to make pots. You can hire anywhere between 1 and 3 skilled artisans (workers), and you can rent 1 or 2 pottery wheels (machines). Pots sell for $125 each. The total product of your factory is shown in the following table. Number of Machines (Capital, K) 1 Pottery wheels are 2 1 8 10 Number of Workers (Labor, L) 2 11 14 3 13 17 Suppose you rent one machine and hire one worker. You would be willing to pay $ to hire a 2nd worker. (Consider the value of the marginal product of labor.) Suppose you rent one machine and hire one worker. You would be willing to pay a rental rate of up to $ Suppose the wage is $350. If you have one pottery wheel, the number of workers you would want to hire is to acquire a 2nd machine. (Consider the value of the marginal product of capital.)

Consider the following production diagram: 12 10 A Capital 6 2 0 0 1 Labor 4 For each of the five labeled points (A, B, C, D, and E), determine whether the correct levels of labor and capital are being used. If the correct level is not being used, explain why, and what change should be made. Hint: Start by identifying the optimal point. Being able to compare to the optimal point will assist you in determining the changes that need to be made.

Bicycles 120 14 8 6 4 2 A B D 0 2 4 6 8 10 Computers Refer to the diagram. If society is currently producing 14 units of bicycles and 0 units of computers and it now decides to increase computer output to 4, the cost Multiple Choice will be 5 units of bicycles. will be 4 units of bicycles. will be zero because unemployed resources are available. of doing so cannot be determined from the information given.

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which of the following statements is true?   1. if the marginal product of labour is higher than the marginal product of capital, then the firm uses more labour than capital in the short run.   2.if the wage rate for labour is lower than the cost of capital, then the firm uses more labour than capital in the short run.   3. if for a given amount of initial capital, the production functions means more labour is needed than capital, then the firm uses more labour than capital in the short run.   4. if for a given amount of initial labour, the production function means that more labour is needed than capital, then the firm uses more labour than capital in the short run.

Consider the Labor Economics Question.  This will provide insight into the idea of the optimal number of workers and the value of the marginal product of labor.   If wages in the restaurant is $16.80 per hour and the price of a Hamburger is $8.30 and the production function for the workers is:   Q = 11L – 0.25L2 How many workers should Your Restaurant employ during the lunch hour to maximize profits?  1 Point   (note—the value of the marginal product of labor and the marginal   revenue product are the same)     We maximize profits which are total revenues less total costs:

Production Function. Consider the Cobb-Douglas production function discussed in class:F(K, L) = AK^1/3 L^2/3. Suppose that parameters are initially A = 1, K = 150, and L = 10.   d) Suppose that the quantity of labor L doubles. Calculate Y, w, r, Y/L, and K/L. Com-ment on how and why these numbers changed relative to (c) and why they did so. E) Suppose that the quantity of capital K doubles as well. (So now both K and L aretwice their previous value). Calculate Y, w, r, Y/L, and K/L. Comment on how thesenumbers changed relative to both their initial values, and their values in (d).