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22 Oct 2020

If productivity has been rising at 15% per year then we can say that wages will increase by

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Unemployment: Long run
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Vaishali Yadav
Vaishali YadavLv10
22 Oct 2020

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If productivity increases by 4% but wages increase by 2%, then it is most likely that:

A. the SAS Curve will shift up.

B. the SAS Curve will shift down.

C. the SAS Curve will not shift.

D. the AD Curve will shift to the left

Production and costs: Consider the following Cobb-Douglas production function for YumYum Yogurt: Q=(L^0.2)*(K^0.5)

a. Intuitively, why are Cobb-Douglas production functions more appropriate representations of reality than, say, linear production functions?
b. Based on the function above, is YumYum's business experiencing economies or diseconomies of scale? Explain how you arrive at your answer.
c. If YumYum decided to boost labor by 15% and capital by 10%, how much will productivity increase?
d. If YumYum wanted to boost productivity by 40% and already knew they were going to increase capital by 20%, how much would they have to increase their labor force to reach this production target?

Consider the following Cobb-Douglas production for red bean coffee. q=(l^0.2)*(k^0.5)

a. Intuitively, why are Cobb-Douglas production functions more appropriate representations of reality than, say, linear production functions?

b. Based on the function above, is red bean coffee's business experiencing economies or diseconomies of scale? Explain how you arrived at your answer.

c. If red bean coffee decided to boost labor by 15% and captail by 10%, how much will productivity increase?

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