We have the production function: y = A(kalpha)(h1 - alpha) We also know that alpha =...
We have the production function: y = A(kalpha)(h1 - alpha)
We also know that alpha = 1/2
The countries we are considering are the US and India.
The ratio of y in the US to India is 15 (yUS/yIndia = 15).
We also know that the ratio of k in the US to India is 10 (kUS/kIndia = 10).
Both countries are equally productive (Aus = Aindia)
What is the ratio of human capital in the US to India?
Please show the work
Homework Answers
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We have the production function: y =
A(kalpha)(h1 - alpha)
We also know that alpha =...
AUS electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0604 In...
AUS electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0604 In the United States, w = $6 and 4 In Mexico, the wage is 10% lower than in the United States but the firm faces the same cost of capital w = 55.40 and r = 4 What are Land K and what is the cost of producing 100 units in both countries? (for all of the following questions, enter a numeric response using a...
15. Consider an economy, with a production function given by Y-AK03L07. This economy's annual GDP growth...
15. Consider an economy, with a production function given by Y-AK03L07. This economy's annual GDP growth rate is 5%. Also assume that L and Kare both growing at annual rates of 2%. Calculate the growth rate of total factor productivity for this economy. a. 2.0% b. 3.0% 4.0% c. d. 5.0% 16. Suppose output is determined by a Cobb-Douglas production function Y=AK L1 Where 0ca<1. If total factor productivity (A) remains constant, but labour (L) and capital (K) inputs both...
Assume that two countries both have the per-worker production function y = k1/2, neither has population...
Assume that two countries both have the per-worker production function y = k1/2, neither has population growth or technological progress, depreciation is 5 percent of capital in both countries, and country A saves 10 percent of output whereas country B saves 20 percent. If A starts out with a capital–labor ratio of 4 and B starts out with a capital–labor ratio of 2, in the long run: A) both A and B will have capital–labor ratios of 4. B) both...
A US electronics firm is considering moving its production to a plant in Mexico. Its estimated...
A US electronics firm is considering moving its production to a plant in Mexico. Its estimated production function is q = 10L0.32K0.56. In the US, the wage rate and the rental cost of capital are same and equal to $15. At the Mexican plant, the firm will pay a 10% lower wage and a 10% higher cost of capital. a) (10 points) What are the L and K and cost of producing q = 250 units in both countries? b)...
Consider an economy described by the Cobb-Douglas production function: Y = A, KAH 1/3 H1/12 1/12...
Consider an economy described by the Cobb-Douglas production function: Y = A, KAH 1/3 H1/12 1/12 1/2 If the capital stock and real GDP each grows at 3 percent per year, while labor hours grow at 1 percent per year, and the quantity of human capital and natural capital are both constant, what is the average annual growth rate of efficiency (or total factor productivity)? 1.5 percent per year 2 percent per year 0-1 percent per year O percent per...
2. Suppose we know the following about Countries 1 and 2: Country l's production function is...
2. Suppose we know the following about Countries 1 and 2: Country l's production function is yı = A (k)", Country 2's production function is y2 = A2(k)", where y = output per capita, k = kapital per capita, A = productivity factor, and A1 > 12. At steady state kz > ki, where kj, ki, are steady state kapital per capita of Countries 2 and 1, respectively. Given the above information, what can we conclude about Country 2's output...
1. Country A and country B both have the production function Y = F(K,L)= VKL. (5...
1. Country A and country B both have the production function Y = F(K,L)= VKL. (5 Points) Does this production function have constant returns to scale? Explain. (5 Points) What is the per-worker production function, y=f(k)? (10 Points) Assume that neither country experiences population growth or technological progress and that 5 percent of capital depreciates each year. Assume further that country A saves 10 percent of output each year and country B saves 20 percent of output each year. Using...
Suppose the aggregate production function is given by the following: Y = N. We know that...
Suppose the aggregate production function is given by the following: Y = N. We know that marginal productivity of labour is: Question 6 options: 1) N-1/2. 2) 0.5N-1/2. 3) N/Y. 4) 1/N. 5) 1.
Here we have the production function y=f(K,L)=K3L, where K is capital input and L is labor...
Here we have the production function y=f(K,L)=K3L, where K is capital input and L is labor input. Let K>0, L>0. 1. What are the marginal products of capital and labor re- spectively? 2. Please compute the technical rate of substitution (we as- sume K is on the horizontal axis). 3. Dose this production function show diminishing technical rate of substitution (in absolute value) when K increases? Please give a brief proof. 4. Please prove that this production function features increas-...
d) 3 marks. Suppose that both Canada and Sri Lanka have the following production function: Y...
d) 3 marks. Suppose that both Canada and Sri Lanka have the following production function: Y = K0.5 [0.5 Both countries are small open economies and share the same real interest rate. Sri Lanka has lower wages than Canada, which country must be more capital intensive? Capital intensity is measured as .
AUS electronics manufacturer is considering moving its production abroad. Suppose its production function is q=L0604 In the United States, w = $6 and 4 In Mexico, the wage is 10% lower than in the United States but the firm faces the same cost of capital w = 55.40 and r = 4 What are Land K and what is the cost of producing 100 units in both countries? (for all of the following questions, enter a numeric response using a...
15. Consider an economy, with a production function given by Y-AK03L07. This economy's annual GDP growth rate is 5%. Also assume that L and Kare both growing at annual rates of 2%. Calculate the growth rate of total factor productivity for this economy. a. 2.0% b. 3.0% 4.0% c. d. 5.0% 16. Suppose output is determined by a Cobb-Douglas production function Y=AK L1 Where 0ca<1. If total factor productivity (A) remains constant, but labour (L) and capital (K) inputs both...
Consider an economy described by the Cobb-Douglas production function: Y = A, KAH 1/3 H1/12 1/12 1/2 If the capital stock and real GDP each grows at 3 percent per year, while labor hours grow at 1 percent per year, and the quantity of human capital and natural capital are both constant, what is the average annual growth rate of efficiency (or total factor productivity)? 1.5 percent per year 2 percent per year 0-1 percent per year O percent per...
2. Suppose we know the following about Countries 1 and 2: Country l's production function is yı = A (k)", Country 2's production function is y2 = A2(k)", where y = output per capita, k = kapital per capita, A = productivity factor, and A1 > 12. At steady state kz > ki, where kj, ki, are steady state kapital per capita of Countries 2 and 1, respectively. Given the above information, what can we conclude about Country 2's output...
1. Country A and country B both have the production function Y = F(K,L)= VKL. (5 Points) Does this production function have constant returns to scale? Explain. (5 Points) What is the per-worker production function, y=f(k)? (10 Points) Assume that neither country experiences population growth or technological progress and that 5 percent of capital depreciates each year. Assume further that country A saves 10 percent of output each year and country B saves 20 percent of output each year. Using...
Here we have the production function y=f(K,L)=K3L, where K is capital input and L is labor input. Let K>0, L>0. 1. What are the marginal products of capital and labor re- spectively? 2. Please compute the technical rate of substitution (we as- sume K is on the horizontal axis). 3. Dose this production function show diminishing technical rate of substitution (in absolute value) when K increases? Please give a brief proof. 4. Please prove that this production function features increas-...
d) 3 marks. Suppose that both Canada and Sri Lanka have the following production function: Y = K0.5 [0.5 Both countries are small open economies and share the same real interest rate. Sri Lanka has lower wages than Canada, which country must be more capital intensive? Capital intensity is measured as .
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