1. ©2005 Brooks/Cole - Thomson Learning FIGURES FOR CHAPTER 7 APPLICATIONS TO PRODUCTION FUNCTIONS Click the mouse or use the arrow keys to move to the next page. Use the ESC key to exit this chapter.

2. ©2005 Brooks/Cole - Thomson Learning Figure 7.1 Diminishing marginal returns.

3. ©2005 Brooks/Cole - Thomson Learning Figure 7.2 The Cobb-Douglas production function fitted to their data.

4. ©2005 Brooks/Cole - Thomson Learning Figure 7.3 Capital’s share of output, 1970–2001. Source: OECD, ratio of gross operating surplus and mixed income to GDP (income approach).

5. ©2005 Brooks/Cole - Thomson Learning Figure 7.4 Solow’s data on the factor share of capital, 1909–1949.

6. ©2005 Brooks/Cole - Thomson Learning Figure 7.5 Solow’s data on labor productivity and capital per worker, 1909–1949.

7. ©2005 Brooks/Cole - Thomson Learning Figure 7.6 Solow’s calculations.

8. ©2005 Brooks/Cole - Thomson Learning Figure 7.7 Solow found that productivity increases are primarily due to technical change rather than capital accumulation—shifts upward in the production function rather than move- ments along it.

9. ©2005 Brooks/Cole - Thomson Learning Figure 7.8 Alternative substitution possibilities. MRTS, marginal rate of technical substitution.