Suppose the Production Function of Automobiles Is Given by

question 17

Essay

Suppose the production function of automobiles is given by a. Show that the marginal product of any given quantity of labor increases as capital is increased.
b. Suppose Japanese and U.S. automakers produce on identical isoquants with this Cobb-Douglas production function and that labor costs are higher in Japan than in the United States. Do autoworkers in Japan have a higher marginal product than American autoworkers? Explain carefully.
c. Now suppose Japanese automakers produce on a different isoquant from U.S. firms, but the prices of Japanese and American cars are identical. Do Japanese or American autoworkers have a higher marginal product? Why?

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Definitions:

Voluntarism

The principle or system in which voluntariness is the basis for actions and decisions in an economic or other social system.

Government Policies

Actions or strategies formulated by a government to tackle economic, social, or political issues affecting the country.

Employer Demands

Specific conditions or changes employers seek from employees or unions during negotiations or bargaining processes.

Card Check Recognition

A method for employees to authorize union representation by signing cards stating they want the union to represent them, bypassing the need for a secret ballot election.