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1. Suppose that a representative firm has a technology of Y zKL1-a. First solve for the capital t...
Question 2. In this problem, we will consider how the rental price of capital Rt and...
Question 2. In this problem, we will consider how the rental price of capital Rt and the wage rate we are determined under the assumptions of the Solow growth model. Suppose there exists a representative firm in this economy with Cobb-Douglas production function given by Y = K L-, and that the price of its output P has been normalized to 1. a) Write out the firm's profit function. (Hint: think about what total revenues and total costs are if...
A firm has a production technology given by: y = x0.35z0.65 , where x is labour...
A firm has a production technology given by: y = x0.35z0.65 , where x is labour input, z is the amount of physical capital. Initial input prices are given by w =1 and r = 1. Suppose now that both capital and labour are variable inputs. Find returns to scale for given technology.
Suppose we introduce government purchases into the Solow Growth model. The production technology is given by...
Suppose we introduce government purchases into the Solow Growth
model. The production technology
is given by
1. Suppose we introduce government purchases into the Solow Growth model. The production technology is given by Y = AK N- where A is some measure of total factor productivity, K, is the level of capital and N is the size of the labor force. Output is split between consumption, C, investment, I, and Government purchases, G. according to Y=C +I+G. Assume that government...
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...
9) According to the Solow model, an increase in the capital-labor ratio will A) always reduce...
9) According to the Solow model, an increase in the capital-labor ratio will A) always reduce steady state consumption per worker. B) always increase steady state consumption per worker. C) reduce steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. D) increase steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. in the 10) According to the Solow model, in the long run, an increase in...
Consider a numerical example using the Solow growth model: Given the production technology as Y=F(K,N)=K^0.5 N^0.5,...
Consider a numerical example using the Solow growth model: Given the production technology as Y=F(K,N)=K^0.5 N^0.5, the capital per worker, k=K/N, evolves by (1+n)k’=szf(k)+(1-d)k. Suppose that d=0.1, s=0.2, n=0 and z=1. (a) Determine the capital per worker(K/N), income per worker(Y/N), and consumption per worker(C/N) in the steady state. (b) Suppose that z increases into 2. Determine the new steady state. What happens in the capital per worker(K/N), income per worker(Y/N), and consumption per worker(C/N) and why?
10. Suppose that output per worker is given by yt -kf, where kt is the capital...
10. Suppose that output per worker is given by yt -kf, where kt is the capital stock per worker at year t and α 1/3. Workers invest 15% of their income. The capital stock depreciates at the rate of 10% per year. The size of the capital stock per worker at year t-0 is ko 10 According to the Solow model, what is the predicted growth rate of output per worker between years 0 and 1. (Assume zero population growth.)...
1. An economy has the production function y = 20k1/2. The current capital stock is 256...
1. An economy has the production function y = 20k1/2. The current capital stock is 256 and the depreciation rate is 8 percent, and the population growth rate is 2 percent. For income per person to grow, the saving rate must exceed Question 1 options: 6 percent 8 percent 10 percent 12 percent Question 2 (1 point) 2. According to the Solow model, if an economy decreases its saving rate, then in the new steady state, compared to the old...
1. Consider a country that is initially in steady state. Suppose the saving rate increases. Moreover,...
1. Consider a country that is initially in steady state. Suppose the saving rate increases. Moreover, the population growth rate increases by 1% but the capital depreciation rate falls by 1%. According to the Solow–Swan model, the per capita capital stock increases, and the country moves to a new, higher steady state level of per capita income. Answer true, false, or uncertain. Please briefly explain your answer. 2. Consider the country of Solow, which is described by the Solow–Swan model....
In the Solow model, suppose the per worker production function is y = 60. Suppose s...
In the Solow model, suppose the per worker production function is y = 60. Suppose s + 0.11, n = 0.06, and d = 0.08. Calculate the steady-state equilibrium capital-labor ratio. k = 22.22. (Round to two decimal places.) Calculate the steady-state level of output per worker. y= (Round to two decimal places.)
Question 2. In this problem, we will consider how the rental price of capital Rt and the wage rate we are determined under the assumptions of the Solow growth model. Suppose there exists a representative firm in this economy with Cobb-Douglas production function given by Y = K L-, and that the price of its output P has been normalized to 1. a) Write out the firm's profit function. (Hint: think about what total revenues and total costs are if...
Suppose we introduce government purchases into the Solow Growth
model. The production technology
is given by
1. Suppose we introduce government purchases into the Solow Growth model. The production technology is given by Y = AK N- where A is some measure of total factor productivity, K, is the level of capital and N is the size of the labor force. Output is split between consumption, C, investment, I, and Government purchases, G. according to Y=C +I+G. Assume that government...
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...
9) According to the Solow model, an increase in the capital-labor ratio will A) always reduce steady state consumption per worker. B) always increase steady state consumption per worker. C) reduce steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. D) increase steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. in the 10) According to the Solow model, in the long run, an increase in...
10. Suppose that output per worker is given by yt -kf, where kt is the capital stock per worker at year t and α 1/3. Workers invest 15% of their income. The capital stock depreciates at the rate of 10% per year. The size of the capital stock per worker at year t-0 is ko 10 According to the Solow model, what is the predicted growth rate of output per worker between years 0 and 1. (Assume zero population growth.)...
In the Solow model, suppose the per worker production function is y = 60. Suppose s + 0.11, n = 0.06, and d = 0.08. Calculate the steady-state equilibrium capital-labor ratio. k = 22.22. (Round to two decimal places.) Calculate the steady-state level of output per worker. y= (Round to two decimal places.)
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