Answer to Question #66851 in Macroeconomics for jane

Question #66851
State whether you think each of the following questions is true (T), false (F), or uncertain
(U) and briefly explain your answer.
(a) If bread is produced by using a constant returns to scale (CRS) production function,
then if the number of workers doubled, twice as much bread will be produced.
(b) A competitive, pro t-maximizing rm hires capital until the marginal product of labor
(MPL) equals money wage (W).
1
Expert's answer
2017-03-29T12:57:07-0400
a) False. Company will produce doubled quantity of bread if not only number of workers doubled, but also capital.
b) False. Profit maximization rule: MPL/w=MPK/r

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