Economic progress is best measured by
a. the growth rate of prices over time.
b. the growth rate of GDP per capita
c. the amount of time it takes a worker to work to afford certain goods and services.
d. the growth rate in the population.
b
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Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = l, r = 500). He must pay unionized donut bakers a monthly salary of $400 each
He projects his monthly production function to be Q = 5KL where Q is tons of donuts. a. With the current level of capital, what is the marginal product of labor? Is the marginal product diminishing? Explain. b. If Evren wishes to make 25 tons of donuts, how many bakers are required given the current level of capital? How much will it cost to produce this (total cost)? c. Derive Evren's short-run cost function with K=1. d. Derive the marginal cost curve from your answer to c. and show the relationship between the marginal cost and marginal product of labor.
The principle of comparative advantage implies that
A) only wealthy countries ultimately can benefit from international trade. B) every country can benefit from international trade. C) we should limit the extent to which people specialize. D) most people are harmed by trade.