Suppose Firms a and B Each Make T-Shirts

question 33

Essay

Suppose firms A and B each make T-shirts.Firm A's production function is q = L^0.5K^0.5.Firm B's production function is q = 1.2 ∗ L^0.5K^0.5.If the two firms each hire the same amounts of capital and labor,compare the two firms in terms of AP_L and MP_L.

---

Definitions:

Mode

Mode refers to the most frequently occurring value in a set of data.

Regression Toward the Mean

A statistical phenomenon wherein extreme scores on one occasion tend to be closer to the average on subsequent testing.

Illusory Correlation

A cognitive bias where people falsely perceive an association between two unrelated events or variables.

Random Assignment

A procedure in experimental designs that ensures each participant has an equal chance of being placed into any group, reducing biases.