A firm is currently producing 100 widgets using 4 units of labor and 12 units of capital. The firm's production function exhibits constant returns to scale. How many units of labor and capital are needed to produce 350 widgets?
A) L = 14; K = 42
B) L = 15; K = 45
C) L = 14; K = 44
D) L = 15; K = 42
A
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Consumers eat salsa with taco chips. The price of salsa rises. How does the increase in the price of salsa affect the demand for taco chips?
A) It decreases the demand for taco chips. B) It increases the demand for taco chips. C) It has no effect on the demand for taco chips. D) It will decrease the demand for taco chips only if taco chips are a normal good. E) It could increase, decrease, or have no effect on the demand for taco chips, but more information is needed to determine the impact.
Which of the following is not a rationale for development planning?
(a) capital market failures. (b) rent seeking behavior. (c) attitudinal or psychological impact. (d) all are rationales for development planning in developing countries.