Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 3, Problem 5RQ
To determine
The concept of the MPN curve is to be determined along with its relationship with the production function and labor
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What is the difference between factor cost and market price? According to macro economics?
An economy has the following Cobb-Douglas production function: ?=100?^(1/3)?^(2/3) . The economy has 125 units of capital and 64 units of labor.
d. Calculate the marginal product of capital MPK.
e. Calculate the marginal product of labor (MPL).
Q = K x L (Quantity = capital X labor)
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Chapter 3 Solutions
Macroeconomics
Ch. 3 - Prob. 1RQCh. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - Prob. 5RQCh. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQ
Ch. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - Prob. 1NPCh. 3 - Prob. 2NPCh. 3 - Prob. 3NPCh. 3 - Prob. 4NPCh. 3 - Prob. 5NPCh. 3 - Prob. 6NPCh. 3 - Prob. 7NPCh. 3 - Prob. 8NPCh. 3 - Prob. 9NPCh. 3 - Prob. 10NPCh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Prob. 7AP
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- What is the marginal product of capital (MPK) for the following production function Q = min {L, K} ? O MPK = 1 if LK MPK = 0 if LK O MPK = 0 if Larrow_forwardThe lines on the graph are budget constraints, showing the tradeoff between labor and leisure. Suppose that when the wage changes, an individual chooses to move from point A to another point on the graph. For each of the other points, where would it belong on the backward bending labor supply curve? Backward‑bendingportionVerticalportionUpward‑slopingportion Answer Bank B D F C Earrow_forward17. If a firm's MPL = 2.0 when that firm hires 25 units of labor to produce 100 units, then which of the following statements would be true: a. as the firm hires additional labor, the MPL will approach its maximum point as the firm hires additional labor, the MPL will increase as the firm hires additional labor, the APL will increase as the firm hires additional labor, the APL will decrease b. C. d.arrow_forwardWhat is the "intertemporal labor substitution" effect (also known as the "Uber" effect)? Although you can use with a numerical example to illustrate your answer, make sure you explain it with words.arrow_forwardQuestion2 Imagine you work for a firm that only utilizes labor and capital as inputs and has a CES production function: q = f(L, K) = [aLº + BK²] 2/2 Where a = B=0.5.y = 1.p = 2. a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this CES function have constant, increasing, or decreasing returns to scale?arrow_forwardConsider an economy with production function given by Y = AK0:5L0:5 where A is the total factorproductivity (TFP), K is the capital stock and L is the labor input. For simplicity assume capital is xed and equal to 1. Assume A=100.a. Write the rm's problem of choosing labor demand. Derive the demand for labor as a functionof the real wage.b. Assume labor supply is inelastic and xed at L= 100. Find the equilibrium values of the wageand the employment level for this economy. Display graphically the labor supply and the labordemand curves. Carefully label your graph.c. Suppose the economy faces a positive productivity shock and TFP is now A=200. Displaygraphically the new labor demand function. What are the equilibrium values of employment andthe real wage?d. Compute the total output when A=100 and when A=200. What is the output's growth rate?Compare that growth rate with the growth rate in A. How does the growth rate of output percapita compares to the growth rate in A? Explain…arrow_forwardUnder what assumptions is the aggregate labour demand function to be represented as a downward-sloping curve so that the real wage equals the marginal product of labour?arrow_forwardWhat is unemployment in macroeconomics?arrow_forwardThere are two factors of production, X and Y. They are being used to produce a fixed amount of output called A. If the amount of output, A is held constant, and the isoquants are convex, would the price of X going down always mean less of Y is used? Explain why or why not by explaining through the use of a graph.arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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