When a Production Function Is Graphed with Real GDP on the Vertical

question 43

Multiple Choice

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________,and a rise in capital __________________.

• A) shifts the production function upward; also shifts the production function upward
• B) shifts the production function downward; shifts the production function upward
• C) moves us up along a given production function; shifts the production function upward
• D) shifts the production function upward; moves us up along a given production function

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Definitions:

Principal-Agent Problem

A dilemma in economics that occurs when one person or entity (the agent) is able to make decisions on behalf of, or that impact, another person or entity (the principal), leading to potential conflicts of interest.

Rent-Seeking Behavior

The practice of manipulating public policy or economic conditions as a strategy to increase personal incomes without adding value.

Public Choice

A field of economics that studies how decisions are made by voters, politicians, and government officials, often applying theories and methods from economics to political science.

Public Good

A good or service that is provided without profit to all members of a society, either by the government or a private individual or organization.