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mc2_revised_4_13_11

# mc2_revised_4_13_11 - Mock Multiple Choice the MPs Kyle F...

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Mock Multiple Choice, the MPs Kyle F. Herkenhoff * UCLA Department of Economics April 15, 2011 1 Marginals Which of the following are true? (We assume a Cobb-Douglas production function Y = AK α L 1 - α ) (a) If α = 1 / 3, then a 6% increase in labor results in a 2% increase in output. (b) If α = 1 / 3, then a 6% increase in labor results in a 4% increase in output. (c) If α = 1 / 5, then MP K K Y = 1 5 (d) If α = 1 / 5, then MP K K Y = 4 5 (e) The following statement MP K K + MP L L = Y holds for α = 1 / 3 but not for α = 1 / 5. (f) Two of the above (g) Three of the above (h) None of the above * Correspondence: [email protected] 1

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ANS: (a) If α = 1 / 3, then a 6% increase in labor results in a 2% increase in output. FALSE: Use the fact that
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mc2_revised_4_13_11 - Mock Multiple Choice the MPs Kyle F...

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