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Problem. Home is an economy endowed with three production factors: labor (L), capital (K) and land...
Consider an economy that uses two factors of production, capital (K) and labor (L), to produce...
Consider an economy that uses two factors of production, capital (K) and labor (L), to produce two goods, good X and good Y. In the good X sector, the production function is X = 4KX0.5 + 6LX0.5, so that in this sector the marginal productivity of capital is MPKX = 2KX-0.5 and the marginal productivity of labor is MPLX = 3LX-0.5. In the good Y sector, the production function is Y = 2KY0.5 + 4LY0.5, so that in this sector...
2. a. The home country is endowed with QF units of food and QC units of...
2. a. The home country is endowed with QF units of food and QC units of clothing. Use an indifference curve diagram to show this economy freely trading such that they export clothing and import food. On your diagram, indicate the endowment and consumption points as well as exports and imports, and the world relative price. Note: Only show the free trade equilibrium in part a. Do not show the autarky equilibrium. b. On your diagram, show what would happen...
ASAP DUE AT MIDNIGHT 1. Consider a small open economy whose relative prices are determined externally...
ASAP DUE AT MIDNIGHT 1. Consider a small open economy whose relative prices are determined externally in the international market. The economy has two sectors - cloth and food. Each sector employs capital and labor and its production function exhibits constant returns to scale and diminishing marginal product. Capital and labor are mobile across industries within the economy. Suppose that there is a unique relative input price corresponding a relative output price and that both goods are produced. All markets...
3. A country's labor market between food (QF) and clothing (Qc) is currently in equilibrium. Labor is used to produce both goods. Land (T) is only used to produce food and Capital (K) is only us...
3. A country's labor market between food (QF) and clothing (Qc) is currently in equilibrium. Labor is used to produce both goods. Land (T) is only used to produce food and Capital (K) is only used to produce clothing d. Explain what happens to the real wage in terms of clothing. Show and explain what happens to the real wage in terms of food. Are workers are better off? e. Building off part (c), show and explain what happens to...
Problem 1 A country (”Home”) is populated with 300 workers who produce either food (F) and/or...
Problem 1
A country (”Home”) is populated with 300 workers who produce
either food (F) and/or clothing (C). Each food worker produces 6
units of food and each clothing worker produces 3 units of
clothing. The preferences of the consumers over food and clothing
are represented by the utility function: u(DF ,
DC) = (DF ) 2/3 (DC)
1/3
1) Assuming that at the optimum, consumers set their marginal
rate of substitution, MRSDF ,DC , to the relative price,
i.e.,...
2. a. The home country is endowed with QF units of food and QC units of...
2. a. The home country is endowed with QF units of food and QC units of clothing. Use an indifference curve diagram to show this economy freely trading such that they export clothing and import food. On your diagram, indicate the endowment and consumption points as well as exports and imports, and the world relative price. Note: Only show the free trade equilibrium in part a. Do not show the autarky equilibrium. b. On your diagram, show what would happen...
Consider a general model of Ricardian trade with 2 countries (Home and Foreign) and 2 goods...
Consider a general model of Ricardian trade with 2 countries
(Home and Foreign) and 2 goods (Clothing and Food): unit labor
costs are aLC and aLF in Home and a∗LC and a∗LF in Foreign. Home
and Foreign are endowed, respectively, with L and L∗ units of
labor. Workers in both countries have the same preferences
represented by a Cobb-Douglas utility function:
Consider a general model of Ricardian trade with 2 countries (Home and Foreign) and 2 goods (Clothing and Food):...
Consider a small open economy (e.g. the Netherlands) producing two goods, clothing and food. The clothing...
Consider a small open economy (e.g. the Netherlands) producing two goods, clothing and food. The clothing industry uses capital (K) and labor (LC) as inputs, while the food industry uses land (La) and labor (LF ) as factors of production. The production technologies for the two industries are given by QC = K ¼ LC 3/4 ; QF = La1/2L F 1/2 . Also, the country is endowed with 216 units of capital, 360 units of labor, and 9 units...
Given production function Q=f(K, L) = 8KL + √L where K is capital and L is labor.
Given production function Q=f(K, L) = 8KL + √L where K is capital and L is labor. a. Find marginal product of labor and marginal product of capital.b. Define what is marginal rate of technical substitution, MRTS. Calculate the MRTS for the above case.c. When K = 10, L = 16, what is the total output? Sketch this isoquant function on a diagram where K is the vertical axis and L is the horizontal axis.
Only the question a Consider two countries (Home and Foreign) that produce goods 1 (with labor...
Only the question a
Consider two countries (Home and Foreign) that produce goods 1 (with labor and capitalj and 2 twith labor and land) according to the production functions described in problems 2 and 3 Initially, both countries have the same supply of labor (100 units each), capital, and land The capital stock in Home then grows. This change shifts out both the production curve for good 1 as a function of labor employed (described in problem 2) and the...
3. A country's labor market between food (QF) and clothing (Qc) is currently in equilibrium. Labor is used to produce both goods. Land (T) is only used to produce food and Capital (K) is only used to produce clothing d. Explain what happens to the real wage in terms of clothing. Show and explain what happens to the real wage in terms of food. Are workers are better off? e. Building off part (c), show and explain what happens to...
Problem 1
A country (”Home”) is populated with 300 workers who produce
either food (F) and/or clothing (C). Each food worker produces 6
units of food and each clothing worker produces 3 units of
clothing. The preferences of the consumers over food and clothing
are represented by the utility function: u(DF ,
DC) = (DF ) 2/3 (DC)
1/3
1) Assuming that at the optimum, consumers set their marginal
rate of substitution, MRSDF ,DC , to the relative price,
i.e.,...
Consider a general model of Ricardian trade with 2 countries
(Home and Foreign) and 2 goods (Clothing and Food): unit labor
costs are aLC and aLF in Home and a∗LC and a∗LF in Foreign. Home
and Foreign are endowed, respectively, with L and L∗ units of
labor. Workers in both countries have the same preferences
represented by a Cobb-Douglas utility function:
Consider a general model of Ricardian trade with 2 countries (Home and Foreign) and 2 goods (Clothing and Food):...
Only the question a
Consider two countries (Home and Foreign) that produce goods 1 (with labor and capitalj and 2 twith labor and land) according to the production functions described in problems 2 and 3 Initially, both countries have the same supply of labor (100 units each), capital, and land The capital stock in Home then grows. This change shifts out both the production curve for good 1 as a function of labor employed (described in problem 2) and the...
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