If the production function is Q = K.5L.5 and capital is fixed at 1 unit, then the average product of labor when L = 36 is:
A. 2/3.
B. 1/6.
C. 1/3.
D. None of the answers are correct.
Answer: B
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Suppose that Canada can produce 15 timber or 3 film and Mexico can produce 9 timber or 3 film. Suppose that opportunity costs are constant. Which of the following is FALSE?
A) Canada has an absolute advantage in timber production. B) Mexico has a comparative advantage in film production. C) The opportunity costs for producing timber are lower in Canada than in Mexico. D) Canada and Mexico would find trade mutually advantageous at a ratio of one unit of film to six units of timber.
Refer to the diagrams in which figures (a) and (b) show demand curves reflecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. The collective willingness to pay for the first unit of this public good is:
A. $18.
B. $14.
C. $10.
D. $6.