When Paul Samuelson switched from physics to economics, Robert Solow is said to have remarked that the average IQ in both disciplines went up. A by-stander responded that Solow’s claim must be wrong because it implies that the average IQ for academia as a whole (which is a weighted average of the average IQ levels for each discipline) must also have gone up as a result of the switch, which is clearly impossible. Was the bystander right? Explain.
Answer to relevant QuestionsDo the following production functions have increasing, decreasing, or constant returns to scale? Which ones fail to satisfy the law of diminishing returns? a. Q = 4K1/2L1/2 b. Q = aK2 = bL2 c. Q = min (aK, bL) d. Q = 4K + 2L ...Why does the short-run MC curve cut both the ATC and AVC curves at their minimum points?A firm has a production function Q = F (K, L) with constant returns to scale. Input prices are r = 2 and w = 1. The output- expansion path for this production function at these input prices is a straight line through the ...A firm produces output with the production function Q = √K √LWWhere K and L denote its capital and labor inputs, respectively. If the price of labor is 1 and the price of capital is 4, what quantities of capital and ...True or false: If marginal cost lies below average fixed cost, the firm should shut down in the short run. Explain.
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