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solutions2 - University of California Riverside Econ 103A...

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University of California, Riverside Econ 103A Macroeconomic Theory Winter 2008 Solution to Quiz # 2 1. Holding capital (K) and productivity (A) constant, an increase in labor (N) raises the marginal product of capital. 2. Holding labor (N) and productivity (A) constant, an increase in capital (K) shifts the MPN curve to the right. 3. Suppose a groundbreaking innovation emerges which raises the productivity level of all workers in an economy. Which of the following statements is correct ? Individual firms would hire more workers at a given real wage level. 4. From an individual firm’s point of view, what is the benefit of hiring an additional worker ? Marginal product of labor multiplied by the market price of output. 5. Suppose the profits of a firm are maximized when it hires 15 workers. This means none of the above. 6. Which of the following about the MPN curve is incorrect ? A change in capital would not affect the position of the MPN curve.
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