3. (55 points total) An economy's aggregate production function is given by Y- A K N-N2....
Consider the following model of the economy Production function: Y = A·K·N – N2/2 Marginal product of labor: MPN = A·K – N. where the initial values of A = 10 and K = 10. The initial labor supply curve is given as: NS = 50 + 4w Initial conditions in the goods market Cd = 790 + .50(Y-T) – 500r Id = 1000 – 500r G = 800 T = 100 Md/P = 110 + 0.5Y- 1000(r + πe) ...
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...
Suppose that the production function is Y = 9 60.500.5 With this production function, the marginal product of labor is MPN = 4.5 K.5/10.5 The labor supply curve is NS = 105 x[(1 – t)xw], where w is the real wage rate, t is the tax rate on labor income, and hence (1 – t) xw is the after-tax real wage rate. The capital stock is K = 25. Assume that the tax rate on labor income, t, equals zero...
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,...
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 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),...
N-1 N=2 N-4 N-16 Table 3: Question 4, Part2 Question 4: The Aggregate Production Function (30 Marks) This question focuses on labour productivity, labour demand, and generally on the production function. Assume that the Aggregate Production Function is represented by the following equation: Y stands for output, K stands for the capital stock, N stands for the number of people employed, L stands for the quantity of land used in production, and A stands for a measure of labour efficiency...
Consider an economy where the aggregate production function is characterized by the following equation: Y=2N^1/2. The labor supply curve is given by the following equation: Ns=8(W/P). Derive the labor demand curve and calculate the equilibrium real wage and the equilibrium level of labor.
Labor Market and Production: Wage=100-N Wage=25+2N Y=A*K.5N.5 Goods Market: C=50+2/3(Y-T)-200r I=100-200r G=70 T=50 Asset Market: MS=245/P MD=1/2(Y)-100r a. Suppose that the current capital-labor ratio is 1 (the amount of capital exactly equals the number of workers) and that the total factor productivity (technology) equals 20. What are the equilibrium wage, employment level, and the full employment level of output? Draw this all graphically and make sure to label the graph
Suppose the marginal product of labor in the economy is given by MPN 0.002 (16, 000- N) 3. (20 points) while the supply of labor is SN 1000+ 1000w. a. Find the market-clearing real wage rate and level of employment b. What happens to the wage rate and employment if wealth rises, reducing the supply of labor to SN =500+ 1000w? c. What happens to the wage rate and employment if after wealth has risen as in part (b), there...