ECON 102 Chapter 26: Ch 26
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Economic growth: sustained, long run increases in the level of real gdp. Human capital: the set of skills workers acquire through formal education and on the job training. Aggregate production function: the relationship between the total amount of each factor of production employed in the nation and the nation"s total gdp. Law of diminishing marginal returns: the hypothesis that if increasing quantities of a variable factor are applied to given quantity of fixed factors, the marginal product of the variable factor will eventually decrease. Constant returns to scale: a situation in which output increases it proportion to the change in all inputs as the scale of production is increased. Embodied technical change: technical change that is intrinsic to the particular capital goods in use. 26. 1: the nature of economic growth: real gdp is an accepted measure of the amount of annual economic activity that passes through markets. Does not tell us about changes in average material living standards.
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The law of eventually diminishing marginal returns: (Points : 1)
a. states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns.
b. is a mathematical theorem that can be logically proved or disproved
c. is the rate at which one input may be substituted for another input in the production process
d. None of the above
b. the incremental change in total output that can be produced by the use of one more unit of the variable input in the production process c. the percentage change in output resulting from a given percentage change in the amount of the variable input X employed in the production process with Y d. None of the above |
b. the marginal rate of technical substitution c. equal to MPx/MPy d. all of the above e. none of the above |
b. equal to the marginal factor cost of the variable factor times the marginal revenue resulting from the increase in output obtained c. equal to the marginal product of the variable factor times the marginal product resulting from the increase in output obtained d. a and b e. a and c |
b. variable cost c. marginal rate of technical substitution d. total cost e. none of the above |
b. the average product of labor (L) is equal to ?2 c. if the amount of labor input (L) is increased by 1 percent, then output will increase by ?1 percent d. a and b e. a and c |
b. relevant to decisions in which one or more inputs to the production process are fixed c. not relevant to optimal pricing and production output decision facilities d. crucial in making optimal investment decisions in new production facilities e. none of the above |
b. all inputs are considered variable c. some inputs are always fixed d. capital and labor are always combined in fixed proportions |
A linear total cost function implies that: (Points : 1) |
b. average total costs are continually decreasing as output increases
c. a and b
d. none of the above