ECON 426W Final: 426 final exam 2014
9 Jan 2019
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Some common economic hypotheses about the rarity of lmfs include (i) difficulties in leasing productive assets; (ii) difficulties with work incentives; (iii) problems obtaining capital; (iv) problems with risk aversion and diversification; and (v) problems involving collective choice. Despite these issues, the plywood cooperatives were quite successful. Explain how the plywood cooperatives overcame the five problems listed above. Explain how the mondragon cooperatives overcame the five problems listed above. The illyrian model of the lmf predicts that when the price of output rises, the quantity of output falls. Explain in words why this occurs (you don"t need algebra). Define the horizon problem for an lmf and explain how it could arise. Define total factor productivity and use a graph to explain why it is a better measure of productivity than the ratio of output to labor input. Then explain how tfp is related to the cobb-douglas production function (use a few equations and be clear about what you are assuming).
