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BUAD350
September 20, 2007
Sample questions
Topic 4
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement or answers the question.
ANSWERS:
1) B, 2) D, 3) D, 4) D, 5) D, 6) C, 7) A, 8) B, 9) C, 10) C
1) In the production function
Y
=
AF(K, L), A
is ________,
K
is ________, and
L
is ________.
1)
A) the productivity of labor; investment; the size of the labor force
B) total factor productivity; the capital stock; the number of workers employed
C) the productivity of labor; the capital stock; the size of the labor force
D) total factor productivity; investment; the number of workers employed
2) Suppose the economy's production function is
Y
=
A K
0.3
L
0.7
. If
K
=
2000,
L
=
100, and
A
=
1, then
Y
=
246. If
K
and
L
both rise by 20%, and
A
is unchanged, by how much does
Y
increase?
2)
A) 10%
B) 15%
C) 5%
D) 20%
3) Suppose the economy's production function is
Y
=
A K
0.3
L
0.7
. An adverse supply shock would
3)
A) shift the production function up and increase marginal products at every level of
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 Spring '07
 Safarzadeh

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