Using the production function Real GDP = T (L, K), define the term production function and describe what each of the variables (T, L, and K) represents. When graphed with Real GDP on the vertical axis and labor on the horizontal axis, which variable(s) can shift the production function and which variable(s) can cause a movement along the production function?
A production function specifies the relation between technology (T) and the quantity of factor inputs to output or Real GDP. In this production function the relevant inputs are labor (L) and capital (K). With labor on the horizontal axis of the production function, a change in labor would cause a movement along the production function. When technology or capital change, it causes the production function to shift.
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If marginal revenue is negative then the revenue lost from receiving a lower price on all the units that could have been sold at the original price is smaller than the additional revenue from selling one more unit of the good
Indicate whether the statement is true or false
If a war interrupted oil production, which of the following would most likely happen in the short run?
a. Unit costs would decrease and there would be an upward movement along the aggregate supply curve. b. Unit costs would increase and the aggregate supply curve would shift upward. c. Unit costs would increase and the aggregate supply curve would shift downward. d. Unit costs would decrease and the aggregate supply curve would shift upward. e. Unit costs would increase and there would be movement along the aggregate supply curve.