ECON 3305: Take-home Questions for Exam 2

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ECON3305:  Take-homeQuestionsforExam2


One question fromthe list will be on the actual exam. This question is worth20 points. Since you do notknowwhichquestion will be on the actual exam, you MUST type up the answers for both questions inadvance.   Makes sureyou typeyour name on the each essayanswer.


Here is myadvice: Do NOT playa Russian roulette with yourcourse grade; make sure you takeyour timetowrite up theanswers in details.   To answerproperly, thesequestions require minimumone-third to a halfpage, single-space, font size 12.


Below is thelist of the questions. Thefirst question is myown,and the second question comes fromyourtextbook.


(1)      How does capital investment affect the marginal physical product of labor?   Does more collegeeducation have the samekind of effect?   Which is a better investment?


(2)      Make sureyou reallyexplain your answer. Ifyou wish,you can also include an example whileexplaining your answer in detail.



According tothe rule foroptimal input usage, a firmshould hire a person as long as hermarginal revenueproduct is greater than her marginal cost to the company. It is well known that manycompanies havemanagement training programs in which new trainees are paid relativelyhigh starting salaries and arenotexpected to make substantial contributions to the companyuntil after the programis over (programsmayrunbetween 6 to 18 months). In offeringsuch training programs, isa companyviolating the optimalityrule?Explain.

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