sGR remains the same as rises.
Assume a Cobb-Douglas production function F(KL) = Kal1-a with 0 < x < 1, which means...
Consider an economy having a Cobb Douglas production function, where the share of capital income in total income is 1/2. The depreciation rate is , population growth rate is n = 0.02 A. The golden rule level of capital per worker is . B. The golden rule level of investment per worker is . C. The golden rule level of output per worker is . D. The golden rule savings rate is X% where X equals . QUESTION 2 20...
1) Consider an economy having a Cobb Douglas production function, where the share of capital income in total income is 1/2. The depreciation rate is , population growth rate is n = 0.02 2) Assume a general savings rate , depreciation rate and a production per worker , where 0< <1. Suppose the savings rate increases. What happens to the golden rule level of capital? 3) Consider an economy that is described by the production function . The depreciation rate...
Assume the following Cobb-Douglas production function: Assume the following Cobb-Douglas production function: Y = AK 0.4 20.6 If Y=12; K=8; and L=95, answer the following questions (SHOW ALL YOUR WORK): - 1. What is total factor productivity? 2. With your answer in (1), assume L=95 and estimate the production function with respect to K 3. Estimate the marginal product of capital and demonstrate diminishing marginal product of capital 4. Estimate real capital income 5. Estimate the share of capital income...
If the U.S. production function is Cobb–Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the Golden Rule steady-state capital–output ratio is 4.29, to reach the Golden Rule steady state, the saving rate must be: A) 17.5 percent. B) 25 percent. C) 30 percent. D) 42.9 percent.
1.The Golden Rule in a Solow Model without a Cobb-Douglas Production Function Suppose that the per-worker production function is: 4k tk +3 where yt = Yt/L and kt = Kt/L A.Does this production function exhibit diminishing marginal product of capital? Illustrate and explain. Note that you can use calculus, but you can also create a table. Note that AKt+1- Akt+1 and: B.Suppose that the savings rate in this economy is 36 percent (s- 0.36) and the depreciation rate is 6...
3. Consider the Diamond model with logarithmic utility (In(Ct)) and Cobb-Douglas production. Describe in words and using equations how the following affects kt+1 as a function of kt: (a) A fall in n. (b) A downward shift in the production function (that is, f(k) takes the form Bka, and B falls). (c) A rise in a
Suppose the production function is Cobb-Douglas and f(x1, x2) = x^1/2 x^3/2 (e) What's the technical rate of substitution TRS (11, 12)? (f) Does this technology have diminishing technical rate of substitution? (g) Does this technology demonstrate increasing, constant or decreasing returns to scale?
A firm's Cobb-Douglas production function for output x is f(l,k)= 25/5k5, where / (labour) and k (capital) 9. are variable inputs costing w (wage rate) and r (rental cost of capital) each per unit (a) Follow the two-step (indirect) method' and begin by setting up the firm's cost- minimisation problem and deriving the three first-order conditions (FOC8) (4 marks) 2(wr)2 x2 (where, to be clear, (c) The cost function derived from the FOC8 above is c(w,r,x) 3125 1 5 the...
AL K, where 0< a< 1, Consider a Cobb-Douglas production function Q(A, L, K) 0B1 and A> 0. If A, K and L are functions of time t, obtain an expression for _ Use 1 dQ this to express the proportional growth rate of output, , in terms of the rate of growth of A, K and L. (14 marks) AL K, where 0
1. Suppose the production function is Cobb-Douglas and f(11,12) = 21222 (a) Write an expression for the marginal product of 21 at the point (21,12). (b) Holding 22 fixed, for small increases in I, will the marginal product of 2 increase, decrease or remain constant? (c) What's the marginal product of factor 2? Will it increase, remain constant or decrease for small increases in ra? (d) Does an increase in the amount of 22 increase, leave unchanged or decrease the...