Comm220 Ch6 Quick Quiz correction

# Comm220 Ch6 Quick Quiz correction - CHAPTER 6 ANSWERS TO...

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1 CHAPTER 6 – ANSWERS TO THE QUICK QUIZ QUESTIONS Q1 Marginal product of the last person hired. It depends on the revenue generated by hiring another worker. It may still be profitable to hire another worker. Marginal product of the last worker hired declines. Q2 No, more of both inputs would produce more output. Q3 a. b. c. Full-time worker Part-time worker Labor Capital Capital Labor

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2 Q4 a. Constant returns to scale. When the inputs are doubled, output will double. For example: L = 2 and K = 2, q = 10 L = 4 and K = 4, q = 20 L = 8 and K = 8, q = 40 MP L =3 and MP K = 2, marginal product of each factor is constant. When L increases by 1, q will increase by 3. When K increases by 1, q will increase by 2. b. Decreasing returns to scale. When the inputs are doubled, output will be less than double. For example: L = 2 and K = 2, q = 2.83 L = 4 and K = 4, q = 4 L = 8 and K = 8, q = 5.66 MP L = 1/(2L + 2K) 1/2 and MP K = 1/(2L + 2K) 1/2 , marginal product of each factor is decreasing. Since L (K) is in the denominator, as L (K) increases,
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## This note was uploaded on 01/22/2012 for the course COMM 220 taught by Professor J.garon during the Spring '08 term at Concordia Canada.

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Comm220 Ch6 Quick Quiz correction - CHAPTER 6 ANSWERS TO...

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