Question

Select one answer as the best response and explain your reason for the selection.

1. Generally speaking technological progress leads to higher output

1. purely because it raises the productivity of capital
2. purely because it raises the steady-state capital stock
3. because it raises both the productivity of capital and the steady state capital stock
4. purely because it increases the capital stock for a given production function
5. purely because it raises the output produced by a given capital stock

Explain your answer:

2. Increases in human capital

1. reduce the marginal product of labor
2. increase the marginal product of physical capital
3. are the by-product of technological innovations
4. shift the economy’s production function downward
5. are calculated as the difference between birth rates and death rates

Explain your answer:

3. Suppose that production at a firm occurs according to the following schedule.

Labor:    0     1     2     3     4     5     6

Output:   0     175 340 495 640 765 880

If the wage per unit of labor is $765 and the price of output is $5 per unit, then the optimal amount of labor to hire is

1. zero
2. at least one but less than two
3. between three and four
4. five
5. six or more

Explain your answer:

4. In most developed economies, unemployment insurance benefits

1. are nonexistent
2. paid for by insurance companies
3. initially replace 100% of lost wages
4. replace an increasing percentage of lost earnings as the duration of unemployment becomes prolonged
5. become less generous as the duration of unemployment is prolonged

Explain your answer:

Answer 1

Answer: 1. Generally speaking technological progress leads to higher output:

C. because it raises both the productivity of capital and the steady state capital stock

Technological progress means discovery of innovative and improved methods of production. it increases productivity of labor and capital which leads to increase in production of output it also rises steady state capital stock

   

Answer: 2. Increases in human capital:

B. increase the marginal product of physical capital

Increase in human capital increase labor productivity and also leads to innovation of new technologies which increases capital productivity. The increase in human capital shifts the production function upward

Answer: 3. the optimal amount of labor to hire is:

d. five

optimal amount of labor to hire is at the point where total labor wages is equal to the total output revenue

total labor wages = wage per labor * labor unit

total revenue = output* price

  both are equal at the 5 labor units and 765 quantity of output

Answer: 4. In most developed economies, unemployment insurance benefits:

d. replace an increasing percentage of lost earnings as the duration of unemployment becomes prolonged

in most developed economies, unemployment insurance benefits the unemployed people by supporting them financial and helps in affording their basic consumption needs during the unemployment period. It is alos beneficial for the economy