If the Economy's Production Function Is Given by Output =

question 17

Multiple Choice

If the economy's production function is given by Output = A(physical capital) ^.3(human capital) ^.7(hours worked) ^.7
And human capital investments are such that human capital = ½ physical capital,then

• A) the marginal product of capital is constant
• B) the marginal product of hours worked is increasing
• C) the marginal product of human capital is increasing
• D) the marginal product of labor (human capital multiplied by hours) is constant
• E) the marginal product of output is falling

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Definitions:

Surety Bond

Insurance arranged in case a party to a contract fails to perform.

Contract Performance

The carrying out of the duties and obligations as stipulated in a contract by the involved parties.

Subrogation Right

The right for an insurer to pursue a third party that caused an insurance loss to the insured, in order to recover the amount of the claim paid.

Insurance Company

An organization that offers risk management to individuals or entities by providing compensation for losses in exchange for premium payments.