1. Suppose an economy's production is defined by the following neoclassical production function: Y=50K 1/3L 2/3....
1. Suppose an economy's production is defined by the following neoclassical production function: Y=50K 1/3L 2/3. Suppose further that the economy wide supply of capital and labor are given as 125 and 64. What will be the equilibrium rental rate of capital in this economy?
a. 10.67
b. 62.5
c. 1,333
2. Suppose an economy's production is defined by the following neoclassical production function: Y=50K 1/3L 2/3. Suppose further that the economy wide supply of capital and labor are given as 125 and 64. What happens to output per worker if there is a war that destroys half the capital in the economy?
a. Output per capita falls to more than half the initial level
b. Output per capita falls to less than half the initial level
c. Output per capita falls to half the initial level
Homework Answers
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1. Suppose an economy's production is defined by the following
neoclassical production function: Y=50K 1/3L
2/3....
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...
Question 7 Suppose an economy begins in steady state which has a production function of Y...
Question 7 Suppose an economy begins in steady state which has a production function of Y = ĀK3L3. By what proportion does per capita GDP change in the long run (at the steady state) in response to each of the following changes? (a) The investment rate doubles. (b) The depreciation rate falls by 10%. (c) The productivity level rises by 10%. (d) An earthquake destroys 75% of the capital stock. (e) A more generous immigration policy leads the population to...
1) An economy has the following aggregate production function: Y= Ak^1/3L^2/3 and capital stock, labour supply...
1) An economy has the following aggregate production function: Y= Ak^1/3L^2/3 and capital stock, labour supply and total factor productivity of 512, 1000, and 5 respectively. a) What is the effect of a 50% change in the capital stock on the marginal product of labour and the marginal product of capital? b) What is the effect of this change in the capital stock on Output and Consumption, if taxes are 800 and the Marginal Propensity to Consume is 2/3? I...
Problem 3. Suppose that output in the economy can be defined by the following production function...
Problem 3. Suppose that output in the economy can be defined by the following production function F(K,N) VKAN, where A is the technology parameter that remains constant at A 10. Labor force grows at 4% per annum, the capital depreciation rate equals 16% and people consume 90% of their income. a) b) c) d) Find the intensive form of the production function (per worker). Find the steady-state level of capital per worker and output per worker. Present the appropriate graph....
3. (55 points total) An economy's aggregate production function is given by Y- A K N-N2....
3. (55 points total) An economy's aggregate production function is given by Y- A K N-N2. The marginal product of labor for this production function is MPN A K- 2N. (a) (10 points) Assume that A- 8 and K- 10. Suppose that the labor supply function for this economy is given by NS 20+ 2w. Find the equilibrium real wage rate, the full employment level of employment, and the full-employment level of output for this economy Draw a production function...
xt Problem 9 Suppose that the economy's production function is given by where Y is output,...
xt Problem 9 Suppose that the economy's production function is given by where Y is output, K is capital, and N is the number of workers. The steady-state level of capital per worker in terms of the saving rate, s, and the depreciation rate, 8, is ON=□ Property format your oxpression using the too sinthe palette Hover over tools t see keyboard shortcuts. E character) as person t can be Enter your arawer in the answer box and then click...
Section B (LONG QUESTIONS): Answer any THREE (3) of the following four ques tions. Each question...
Section B (LONG QUESTIONS): Answer any THREE (3) of the following four ques tions. Each question is worth 25 marks for a total of 75 marks. B1. Solow (neoclassical) growth model: Consider the Solow (neoclassical) growth model seen in class where y denotes output per worker, k physical capital per worker, and A total factor productivity. Suppose that at any point in time the production function in per-worker terms is represented by where f(k) is increasing in k and there...
Suppose the per-capita production function is given by y=\k, where kis capital per person and y is output per person....
Suppose the per-capita production function is given by y=\k, where kis capital per person and y is output per person. Suppose that the savings rate in this economy is 50% and capital depreciates at the rate of 25% a year. The steady-state capital-to-labor ratio is: k-1 k 2 k-4 cannot be determined from the above information.
2. Suppose that a hypothetical economy has the following relationship between its real output and the input quantit...
2. Suppose that a hypothetical economy has the following relationship between its real output and the input quantities necessary for producing that output: Input Quantity Real GDP 150.0 $400 112.5 300 75.0 200 a. What is productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? c. In what di rection would a $1 increase in input price push the economy's aggregate supply curve? What would cause such an...
7. Suppose a country's economy can be represented by the following Cobb-Douglas production function for per...
7. Suppose a country's economy can be represented by the following Cobb-Douglas production function for per capita output: y -k where a -1/3. The depreciation and investment rates are respectively δ-5% and γ-26.21%. Suppose that capital per worker at period 0 is ko-12 What is the percent change in the level of income per worker between period 0 and period 1? (b) Increases by 5.4% (c) Decreases by 2.4% (d) Increases by 7.4% (e) Increases by 1.7%
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...
Question 7 Suppose an economy begins in steady state which has a production function of Y = ĀK3L3. By what proportion does per capita GDP change in the long run (at the steady state) in response to each of the following changes? (a) The investment rate doubles. (b) The depreciation rate falls by 10%. (c) The productivity level rises by 10%. (d) An earthquake destroys 75% of the capital stock. (e) A more generous immigration policy leads the population to...
Problem 3. Suppose that output in the economy can be defined by the following production function F(K,N) VKAN, where A is the technology parameter that remains constant at A 10. Labor force grows at 4% per annum, the capital depreciation rate equals 16% and people consume 90% of their income. a) b) c) d) Find the intensive form of the production function (per worker). Find the steady-state level of capital per worker and output per worker. Present the appropriate graph....
3. (55 points total) An economy's aggregate production function is given by Y- A K N-N2. The marginal product of labor for this production function is MPN A K- 2N. (a) (10 points) Assume that A- 8 and K- 10. Suppose that the labor supply function for this economy is given by NS 20+ 2w. Find the equilibrium real wage rate, the full employment level of employment, and the full-employment level of output for this economy Draw a production function...
xt Problem 9 Suppose that the economy's production function is given by where Y is output, K is capital, and N is the number of workers. The steady-state level of capital per worker in terms of the saving rate, s, and the depreciation rate, 8, is ON=□ Property format your oxpression using the too sinthe palette Hover over tools t see keyboard shortcuts. E character) as person t can be Enter your arawer in the answer box and then click...
Section B (LONG QUESTIONS): Answer any THREE (3) of the following four ques tions. Each question is worth 25 marks for a total of 75 marks. B1. Solow (neoclassical) growth model: Consider the Solow (neoclassical) growth model seen in class where y denotes output per worker, k physical capital per worker, and A total factor productivity. Suppose that at any point in time the production function in per-worker terms is represented by where f(k) is increasing in k and there...
Suppose the per-capita production function is given by y=\k, where kis capital per person and y is output per person. Suppose that the savings rate in this economy is 50% and capital depreciates at the rate of 25% a year. The steady-state capital-to-labor ratio is: k-1 k 2 k-4 cannot be determined from the above information.
2. Suppose that a hypothetical economy has the following relationship between its real output and the input quantities necessary for producing that output: Input Quantity Real GDP 150.0 $400 112.5 300 75.0 200 a. What is productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? c. In what di rection would a $1 increase in input price push the economy's aggregate supply curve? What would cause such an...
7. Suppose a country's economy can be represented by the following Cobb-Douglas production function for per capita output: y -k where a -1/3. The depreciation and investment rates are respectively δ-5% and γ-26.21%. Suppose that capital per worker at period 0 is ko-12 What is the percent change in the level of income per worker between period 0 and period 1? (b) Increases by 5.4% (c) Decreases by 2.4% (d) Increases by 7.4% (e) Increases by 1.7%
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