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ANSWERS TO HOMEWORK QUESTIONS Chapter 3 Review Questions 1. A production function shows how much output can be produced with a given amount of capital and labor. The production function can shift due to supply shocks, which affect overall productivity. Examples include changes in energy supplies, technological breakthroughs, and management practices. Besides knowing the production function, you must also know the quantities of capital and labor the economy has. 2. The upward slope of the production function means that any additional inputs of capital or labor produce more output. The fact th