Intermediate Macroeconomics 2

What Determines a Nation’s Total Output?

• The economy’s ability to produce goods and services depend on its prices of inputs or factors of production and technology to turn inputs into output.

• The economy’s ability to produce goods and services depend on its quantity of inputs or factors of production and technology to turn inputs into output.

• The economy’s ability to produce goods and services depend on the demand of consumers

• The economy’s ability to produce goods and services depend on Capital resources and human resources

What is the economy's production function?

• Y=f(L,R)

• Y=f(L,T,R)

• Y=K/L

• Y=f(L,K,R)

What should the company do when MPL > W/P?

• firm should hire less L

• firm should hire the right amount of L

• firm should hire more L

• firm should not hire L

In the neoclassical model, there are 3 markets: Goods and services market, (a)   market, Loanable funds market

MPL(marginal Production of Labor)=?

The revenue maximized when:

• MPL=W/P

• MPL=R/P

• MPK=R/P

• MPK=W/P

How many labor the firm should employ if W/P=5 to maxmize the revenue?

(a)  

How Factor Prices Are Determined?

Factor prices are determined at the (a)   where factor supply equals factor demand in factor markets.

The production function displays constant returns:

What is the marginal product of labor (MPL) when output increases by 20 units as the number of workers increases from 1 to 2?

(a)