Consider the following hourly production function: Y = 5 K.3 L.7 for an economy. Furthermore, the country...

Consider the following hourly production function: Y = 5 K^.3 L^.7for an economy. Furthermore, the country in question has a labor supply of 10 million, and a capital stock of 1 billion. What is the equilibrium hourly wage for this country (rounded to 2 decimals)? Show your work!

Expert Solution

Rahul Sunny answered 2 years ago

3. • Consider an economy described by the production function: Y 5 F(K, L) 5 K0.4L0.6....

3. • Consider an economy described by the production function: Y 5 F(K, L) 5 K0.4L0.6. a. What is the per-worker production function? b. Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate. c. Assume that the depreciation rate is 15 percent per year. Make a table showing steadystate capital per worker, output per worker, and consumption...

1. • Country A and country B both have the production function Y 5 F(K, L)...

1. • Country A and country B both have the production function Y 5 F(K, L) 5 K1/3L2/3. a. Does this production function have constant returns to scale? Explain. b. What is the per-worker production function, y 5 f (k)? c. Assume that neither country experiences population growth or technological progress and that 20 percent of capital depreciates each year. Assume further that country A saves 10 percent of output each year and country B saves 30 percent of output...

Consider the economy described by the production function Y = F (K, L x E) =...

Consider the economy described by the production function Y = F (K, L x E) = Kα(LE)1-α (a) Derive per effective worker production function. (b) Assume there is population growth rate, depreciation rate and technology growth rate. -Write the law of motion of k. -Tell how k* will be changed when population growth rate increases with graph. (c) Calculate steady state equilibrium. k∗ = y∗ = c∗ = (d) Calculate gold rule capital stock and output. kgold = ygold =...

In the classic model given the following: Production function: Y=3 K^.5 L^.5 Labor (L) is 400...

In the classic model given the following: Production function: Y=3 K^.5 L^.5 Labor (L) is 400 units Capital (K) is 100 units Taxes (T) are 200 Government Spending (G) is 100 Marginal Propensity to Consume is .6 Investment is determined by the following function: I(r) = 1000- 100r where r is real interest rate. 1. a.) full formula, Y=c(Y-T)+I+G, What are the equilibrium values of C, I and r? b.) How much are Public savings, Private savings and National Savings?...

Consider the production function: Y = AK1/3L2/3 . Y is output, K is capital, and L...

Consider the production function: Y = AK1/3L2/3 . Y is output, K is capital, and L is labor. The marginal product of labor is: 2/3A(K/L)1/3 The marginal product of capital is: 1/3A(L/K)2/3 a) Explain how a tax cut on capital promoting capital accumulation can benefit workers. b) Labor unions have often opposed immigration. Using the above equations, explain why. c) Why is productivity growth so important in raising living standards across the population?

Problem 2 Consider an economy described by the production function: Y = F(K,L) = K 1/2...

Problem 2 Consider an economy described by the production function: Y = F(K,L) = K 1/2 L 1/2 a. What is the per- worker production function? b. Assuming no population growth or technological progress, find the steady- state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate. c. Assume that the depreciation rate is 10 percent per year. Make a table showing steady-state capital per worker, output...

Consider the production function F(L,K) = L^2/3 K^2/3 . (f) Does this production function exhibit increasing,...

Consider the production function F(L,K) = L^2/3 K^2/3 . (f) Does this production function exhibit increasing, decreasing or constant returns to scale? Explain. (g) Find the total cost, average cost and marginal cost of producing y units of output. Is the average cost increasing or decreasing in y? Is the marginal cost higher or lower than the average cost? Question 2 The production of magic chairs requires only two inputs: seats (S) and legs (L) (no other inputs are required...

Consider the following aggregate production function: Y=100×L×K, where A is the total factor productivity, K is...

Consider the following aggregate production function: Y=100×L×K, where A is the total factor productivity, K is the amount of capital in the economy, L is the labour force, and Y is the GDP. Is this aggregate production function exhibiting the constant returns to scale? Explain how you know. (2) Is this aggregate production function exhibiting the diminishing marginal product of capital? Explain how you know. (2) In 1867, the government employed 6% of the country’s workers. Since then, the country’s...

Consider production function Q= L^3 * K^4 - L^2 (a) Determine the MRTS L,K for this...

Consider production function Q= L^3 * K^4 - L^2 (a) Determine the MRTS L,K for this production function (b) Does this production function have an uneconomic region? If so, describe the region algebraically. (Hint: your answer will be an inequality like this: K<5L)

Consider the following production function: Y = K.5(AN).5, where both the population and the pool of...

Consider the following production function: Y = K.5(AN).5, where both the population and the pool of labor are growing at a rate n = .07, the capital stock is depreciating at a rate d = .03, and A is normalized to 1. a. What are capital’s and labor’s shares of income? b. What is the form of this production function? c. Find the steady-state values of k and y when s = .20. d. (i) At what rate is per...

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