We know equilibrium is achieved when wage=MPL
when L=K=1000 then MPL=1/2*1000/1000=1/2
Thus Equilibrium wage rate=1/2
ans is A
Assume that output in the economy is given by a production function that implies the following...
Question 3: Productivity, Output, and Employment (20 marks) Assume that the aggregate production is given by the following: Y stands for output, K stands for the capital stock, N stands for the number of the people employed, L stands for the quantity of land used in production, and A stands for a measure of labour efficiency. α and β are parameters whose values are between 0 and 1. a) Derive an analytical expression for the marginal product of capital (MPK),...
Question 3: Productivity, Output, and Employment (20 marks) Assume that the aggregate production is given by the following: Y stands for output, K stands for the capital stock, N stands for the number of the people employed, L stands for the quantity of land used in production, and A stands for a measure of labour efficiency. a and B are parameters whose values are between O and I a) Derive an analytical expression for the marginal product of capital (MPK),...
Question 7. Imagine that the production function of a small open economy is given by: Y- AK111/2 where A-1,25 K-L-3600 C-200+0,75Yd CA=-600+600q T-900 I-1000- 6000r G= 1 200 Please, calculate: . Th r* 5% e level of C, I, S, CA and q in equilibrium if we are a closed economy; The level of C, I, S, CA and q in equilibrium if we open our economy; How should change the government spending in order to assure the CA equilibrium?...
Assume that the aggregate production is given by the following: Y stands for output, K stands for the capital stock, N stands for the number of the people employed, L stands for the quantity of land used in production, and A stands for a measure of labour efficiency. a and B are parameters whose values are between 0 and 1 c) What are the equilibrium levels of the real wage rate, employment and the total output Assume that α β-3....
PROBLEM NO 2. An Open Economy in the Short Run and The Medium Run (25 Points) a. Indonesia's equilibrium condition of goods and services market can be expressed by the following equation: Y = CAY - T) + (Y, r) +G-IMY, )) { + X(Y*, £) where: Y=domestic output; Y*= foreign output; C= consumption: T=tax; l=investment, r=real interest rate; G=government spending, € = Real Exchange Rate. If it is assumed that the Marshall-Lerner condition holds. Explain in words the effects...
Work It Out. Consider an economy with the following Cobb-Douglas production function: Y= 5K/3L2/3 where L the wag the sect are will a. If w wh a. Derive the equation describing labor demand in this economy as a function of the real wage and the capital stock. (Hint: Review Chapter 3.) b. The economy has 27,000 units of capital and a labor force of 1,000 workers. Assuming that factor prices adjust to equilibrate supply and demand, calculate the real wage,...
Consider a simple model of the labour market, characterised by a downward-sloping labour demand curve and an upward-sloping wage-setting curve in theN − W/P - plane, where N is the number of employed workers and W/P the real wage. Labour demand is a linear function of N and given byW/P = 140 − 0.5N.Wage setting is given byW/P = 44 + 0.5N.A. Suppose that the labour force, L, comprises 100 workers. Illustrate the equilibrium in a diagram and compute employment,...
1. The production function for Belgium is given by Y = AKIN and K 25. 4 = 9 is given. The labor supply curve is given by N, = 100(1 - 1) where we is the before-tax real wage, and (1 - T) is the afte rate. The labor income is given by the product of the real wage and the equilibrium employment level. (a) Write down the equation of the labor demand curve. Draw the labor demand curve. Then,...
d. Assume that the aggregate production function is given by: where Y is aggregate output, K is capital, L is the number of workers in the economy and E is the state of technology. Further assume that capital depreciates at a rate of δ, the rate of technological progress is g, the population is growing at a rate of n and the saving rate is s. I5 marks] i. Determine the scale of production? Suppose capital is increased by a...
Assume that the aggregate production is given by the following: Y stands for output, K stands for the capital stock, N stands for the number of the people employed, L stands for the quantity of land used in production, and A stands for a measure of labour efficiency. a and B are parameters whose values are between 0 and 1 We were unable to transcribe this imaged) Suppose labour efficiency declines to A 1, what happens to the equilibrium levels...