Non-neutral technological change is more valuable to labor than neutral technological change. Indicate whether the statement is true or false ANSWER True . Neutral technological change leaves the proportion in which inputs are used (for example, the labor/capital ratio) unchanged, but non-neutral technological changes are innovations that alter the labor/capital ratio. The labor/capital ratio […]
As opposed to general equilibrium analysis, partial equilibrium analysis looks A) at an equilibrium and changes to it in a single, isolated market. B) at how changes in all other markets effect a particular market. C) at how equilibrium is determined in all markets simultaneously. D) at either price or quantity movements. ANSWER A […]
Johnny has worked as a CPA for five years and wants to open his own public accounting practice. The cost of his college degree in accounting represents A) the opportunity cost of this endeavor. B) a sunk cost. C) an expense. D) a variable cost. ANSWER B
Suppose the production function for a certain device is q = L + 2K. If a neutral technical change has occurred, which of the following could be the new production function? A) q = L + 5K B) q = 5 (L + K) C) q = 2L + 4K D) All of the […]
A general equilibrium analysis of a price change in the corn chip market would include an investigation of the impacts in A) the television market. B) the coffee market. C) the salsa market. D) All of the above. ANSWER C
Dell computers has increased production efficiency by A) producing output with fewer inputs. B) expanding the amount of inputs used. C) outsourcing production. D) relying on decreasing returns to scale. ANSWER A
If a technological change occurs such that the production function shifts from q = 10K0.5 L0.5 to q = 10.5K0.3 L0.5, then the technological change is A) both neutral and non-neutral. B) neutral. C) non-neutral. D) Not enough information given. ANSWER A
Suppose firms A and B each make T-shirts. Firm A’s production function is q = L0.5K0.5. Firm B’s production function is q = 1.2 L0.5K0.5. If the two firms each hire the same amounts of capital and labor, compare the two firms in terms of APL and MPL. What will be an ideal response? […]
The implementation of the assembly line is an example of how A) changes in the organization of production improve productivity. B) neutral technical change improves productivity. C) non-neutral technical change can decrease productivity. D) labor saving technical change increases economy-wide unemployment. ANSWER A
Technical and organizational change A) typically reduces prices by increasing the supply of the product, ceteris paribus. B) typically reduces prices by decreasing the demand for the product, ceteris paribus. C) typically increases prices by increasing the demand for the product, ceteris paribus. D) typically increases prices by decreasing the supply for the product, ceteris […]
