Imagine an Economy with Production Function Y = F(K)= and 400

question 79

Multiple Choice

Imagine an economy with production function Y = F(K) = and 400 units of capital.If the fraction of output invested in new capital is  = 0.2,how much new capital will be created in the next period?

• A) 2
• B) 4
• C) 6
• D) 8

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Definitions:

Technological Innovation

The development and application of new ideas, devices, or methods in technology which significantly improve goods, services, or processes.

Cost Curves

Graphical representations of how the cost of production varies with changes in the quantity of output produced, including average and marginal costs.

Average Fixed Cost

Fixed cost divided by the level of output.

Producer Surplus

The gap between the price that suppliers are prepared to take for a product or service and the real price they get.