You should be prepared for test questions where you

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: cts 0.18 0.33 0.51 1.92 Food and Kindred Products 0.43 0.48 0.91 1.09 Transportation equipment 0.44 0.48 0.92 1.08 Apparel and other textiles 0.70 0.31 1.01 (see note below) Furniture and fixtures 0.62 0.40 1.02 0.98 Electronics and electric equipment 0.49 0.53 1.02 0.98 Paper and allied products 0.44 0.65 1.09 0.91 Petroleum and coal products 0.30 0.88 1.18 0.85 Primary metal 0.51 0.73 1.24 0.86 Note: Margin of error is In this case may be considered to be “constant returns to scale” ● As the firm will use less labor and capital to produce the same target output . In fact, you should show these elasticities: While requires fewer inputs, depending on the returns to scale, a 1% increase in may reduce input use and cost by more than, less than or equal to 1%. You should be prepared for test questions where you might be asked to work out and . You should also work out the elasticities for the US manufacturing sectors example. ● Since labor and capital can be substituted for each other, as you should show that: the firm will use less labor and more capital where As wages rise, the firm substitutes capital for labor but th...
View Full Document

Ask a homework question - tutors are online