Homework Answers
Add Answer to:
Consider the simple production model studied in class with production function 10 p Y-A/2/3 Suppose now...
Questions 5 to 7 Consider the simple production model studied in class but with different exponents...
Questions 5 to 7 Consider the simple production model studied in class but with different exponents Suppose that the production function is Cobb-Douglas. Namely, we have Y = AKUL The data for this economy is A 10, K 60 and the initial population is 30. We will assume that everyone in this country works so that population equals employment and per-person GDP equals per-worker GDP. The economy is hit by a hurricane. As a result, half of the stock of...
1 (Specific Factor Model, Chapter 3) In the simple" version of the specific factor model, there...
1. (Specific Factor Model, Chapter 3) In the "simple" version of the specific factor model, there are two sectors (goods), one factor (labor) that is perfectly mobile between the two sectors, and one fixed - or specific - factor in each sector. To be concrete, suppose the two goods are food and clothing, the specific factor in food is "land" - represented by "T", and the specific factor in clothing is "capital", represented by "K'. The production functions for each...
From now on, let the production function of the firm be Y = 2K*N1-a, where a...
From now on, let the production function of the firm be Y = 2K*N1-a, where a is a parameter between 0 and 1. 4. Verify that this production function has constant return to scale. 5. Derive the marginal product of labor MPx and marginal product of capital MPK. How does MPN change with N and K? 6. Solve the firm's optimization problem analytically. That is, to derive the firm's opti- mal choice as a function of exogenous variables (i.e., in...
2. Consider a Solow growth model with Cobb-Douglas production function Y Ko (AN)-a with constant savings...
2. Consider a Solow growth model with Cobb-Douglas production function Y Ko (AN)-a with constant savings rate s, depreciation rate d and no growth in productivity or labor (gA = gN = 0) (a) Suppose A = 1, a = 1/3, s = 0.2 and 5 = 0.1 (annual). Calculate the steady state capital per worker and steady state output per worker (b) Suppose that the real wage w and real return to capital r are equal to the marginal...
1. Consider the following production functions. In each case determine if: • the function is Cobb...
1. Consider the following production functions. In each case determine if: • the function is Cobb Douglas (Y = AK 11-a). If the function is Cobb Douglas, what is the value of the parameter a? • Do capital and labor exhibit diminishing returns. Explain your thinking using algebra / calculus /a graph etc. (a) F(K, L) = 27K+15VL (b) F(KL) = 5K + 3L (c) F(KL) = K0.5 0.5 (a) F(KL) - VK2 + L2 2. Suppose that the production...
Consider the Solow growth model with the following production function where y is output. K is ca...
A and B only
Consider the Solow growth model with the following production function where y is output. K is capital, s is the productivity and is labor. Assume that 0 < α < 1 Further, suppose that labor grows at a constant rate n. That is. 1 + n. Also, assume that capital depreciates at rate d and that gross investment in capital is fraction s of output. a Letting k-N, obtain the law of motion for capital accumulation...
8. Suppose that the production function is Y=5K0.5N0.5. With the production function, the marginal product of...
8. Suppose that the production function is Y=5K0.5N0.5. With the production function, the marginal product of labor is MPN=0.5K0.5N-0.5. The capital stock is K=30. The labor supply curve is NS=100[(1-t)w]2, where w is the real wage rate, t is the tax rate on labor income, and hence (1-t)w is the after-tax real wage rate. a) Assume that the tax rate on labor income, t, equals zero. Find the equation of the labor demand curve. Calculate the equilibrium levels of the real...
7. Suppose a shock hits the economy that abides by a Classical model and you observe...
7. Suppose a shock hits the economy that abides by a Classical model and you observe the following changes: . Overall output increases . Marginal productivity of workers decrease Which of the following could lead to these observations? A. Flood in Minnesota, which destroyed the production facility. B Invention of personal computers C. A huge lake was drained and new fertile land was revealed D. Immigrants get working visas and join the labor force. 8. Consider the labor demand curve...
9. Consider a Classical model with the following specifications in Q1, 2019: . Labor Supply: NS-1%,...
9. Consider a Classical model with the following specifications in Q1, 2019: . Labor Supply: NS-1%, Cobb-Douglas Production Function . The Quantity Theory of Money accurately describes aggregate demand, The Theory of Distribution holds, Parameter values: [y, a, A, K, M, V] [30,0.3, 130, 500, 2500,40]. Suppose a reduction in labor law regulations leads to an outward shift in labor supply, represented as an increase in y from 30 to 32 during Q2, 2019. Assume that everything else stays the...
HOMEWORK # 3 Productivity. Outeut and Employment #1 suppose the economy's production function is v-AK0.3 0.7...
HOMEWORK # 3 Productivity. Outeut and Employment #1 suppose the economy's production function is v-AK0.3 0.7 When K 2,000 N=50 what is r? (in % form and 1 decimal) #2 According to Okun's law, if actual output grew 3% and full-employment output rose 5%, what would be the change in the unemployment rate? #3 Cupcake Stand # Cupcakes Produced # workers 0 12 30 36 40 If Cupcakes sell for $5 each and the wage rate (nominal) is $40, how...
Questions 5 to 7 Consider the simple production model studied in class but with different exponents Suppose that the production function is Cobb-Douglas. Namely, we have Y = AKUL The data for this economy is A 10, K 60 and the initial population is 30. We will assume that everyone in this country works so that population equals employment and per-person GDP equals per-worker GDP. The economy is hit by a hurricane. As a result, half of the stock of...
From now on, let the production function of the firm be Y = 2K*N1-a, where a is a parameter between 0 and 1. 4. Verify that this production function has constant return to scale. 5. Derive the marginal product of labor MPx and marginal product of capital MPK. How does MPN change with N and K? 6. Solve the firm's optimization problem analytically. That is, to derive the firm's opti- mal choice as a function of exogenous variables (i.e., in...
2. Consider a Solow growth model with Cobb-Douglas production function Y Ko (AN)-a with constant savings rate s, depreciation rate d and no growth in productivity or labor (gA = gN = 0) (a) Suppose A = 1, a = 1/3, s = 0.2 and 5 = 0.1 (annual). Calculate the steady state capital per worker and steady state output per worker (b) Suppose that the real wage w and real return to capital r are equal to the marginal...
1. Consider the following production functions. In each case determine if: • the function is Cobb Douglas (Y = AK 11-a). If the function is Cobb Douglas, what is the value of the parameter a? • Do capital and labor exhibit diminishing returns. Explain your thinking using algebra / calculus /a graph etc. (a) F(K, L) = 27K+15VL (b) F(KL) = 5K + 3L (c) F(KL) = K0.5 0.5 (a) F(KL) - VK2 + L2 2. Suppose that the production...
A and B only
Consider the Solow growth model with the following production function where y is output. K is capital, s is the productivity and is labor. Assume that 0 < α < 1 Further, suppose that labor grows at a constant rate n. That is. 1 + n. Also, assume that capital depreciates at rate d and that gross investment in capital is fraction s of output. a Letting k-N, obtain the law of motion for capital accumulation...
7. Suppose a shock hits the economy that abides by a Classical model and you observe the following changes: . Overall output increases . Marginal productivity of workers decrease Which of the following could lead to these observations? A. Flood in Minnesota, which destroyed the production facility. B Invention of personal computers C. A huge lake was drained and new fertile land was revealed D. Immigrants get working visas and join the labor force. 8. Consider the labor demand curve...
9. Consider a Classical model with the following specifications in Q1, 2019: . Labor Supply: NS-1%, Cobb-Douglas Production Function . The Quantity Theory of Money accurately describes aggregate demand, The Theory of Distribution holds, Parameter values: [y, a, A, K, M, V] [30,0.3, 130, 500, 2500,40]. Suppose a reduction in labor law regulations leads to an outward shift in labor supply, represented as an increase in y from 30 to 32 during Q2, 2019. Assume that everything else stays the...
HOMEWORK # 3 Productivity. Outeut and Employment #1 suppose the economy's production function is v-AK0.3 0.7 When K 2,000 N=50 what is r? (in % form and 1 decimal) #2 According to Okun's law, if actual output grew 3% and full-employment output rose 5%, what would be the change in the unemployment rate? #3 Cupcake Stand # Cupcakes Produced # workers 0 12 30 36 40 If Cupcakes sell for $5 each and the wage rate (nominal) is $40, how...
Most questions answered within 3 hours.
-
starting in the radial vein list in order all the vessels through
which an erythrocyte will...
asked 1 minute ago -
Management at Work
As the training and development manager at the Litter*Bit*Better
Cat Litter Company, part...
asked 3 minutes ago -
What is the significance of the constraints in a physical model?
What part do distinct constraints...
asked 1 hour ago -
a student was diagnosed with myopia (nearshightedness). He can
comfortably read a newspaper when it is...
asked 59 minutes ago -
Consider a 3m x 3m window in a house. The thermal conductivity
is reported to be...
asked 1 hour ago -
Why has California been the favorite destination of large number
of secondary migrants?
asked 2 hours ago -
Do not neglect the old for the new. The existing business must
not lose priority simply...
asked 5 hours ago -
Kylie is a single mom with two dependent children,
Tanner, age 7 and Olivia, age 11....
asked 6 hours ago -
Phosphorous + bromine = phosphorous tribromide. If 35.0 g of
bromine are reacted and 27.9 grams...
asked 7 hours ago -
Derive the long wavelength limit of the Planck energy density
distribution
asked 7 hours ago -
Calculate the pH of each of the following solutions.
0.50 M HBr
3.1×10−4 M KOH
4.2×10−5...
asked 11 hours ago -
For the year ended December 31, Depot Max’s cost of merchandise
sold was $85,600. Inventory at the...
asked 11 hours ago