Suppose the production function isY=AKαL1-α where A = 4 and α=0.4 (note: there is no change in technology since A is constant)

Suppose the production function isY=AKαL1-α where A = 4 and α=0.4 (note: there is no change in technology since A is constant). Assume the economy is in a steady state. The labor force growth rate n = 0.02, capital depreciation rate δ = 0.1, and savings rate s = 0.06. What is the capital per worker in the steady state according to the Solow model?

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Rahul Sunny answered 2 years ago

4. Suppose a firm’s technology is described by a production function where the quantity produced is...

4. Suppose a firm’s technology is described by a production function where the quantity produced is equal to the square root of capital times labor (that is, Q = √(L●K) a. Using graph paper, draw the isoquant for output = 8 units. b. Suppose the firm has $128 to spend on its variable inputs and the price of L and K is $8. On the same graph on which you drew the isoquant, draw the isocost line. What is the...

A firm’s production function is ? = ?Lα ?β where A, α, and β are positive...

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Question 1: Show that the Cobb-Douglas Production function Y = zKαN1−α, where 0 < α <...

Question 1: Show that the Cobb-Douglas Production function Y = zKαN1−α, where 0 < α < 1, satisfies all assumptions made in lecture 5. Assumptions: 1) Output increases when either the capital stock or the number of workers increase 2) Both the marginal product of capital and the marginal product of labor are decreasing 3) The marginal product of labor increases when capital increases, and the marginal product of capital increases when labor increases 4) For any constant x >...

Suppose that production of widgets requires capital and labor. The production function is constant returns to...

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3. Suppose that the production function is CobbDouglas with parameter α = 0.3. a. What fractions...

3. Suppose that the production function is CobbDouglas with parameter α = 0.3. a. What fractions of income do capital and labour receive? b. Suppose that immigration raises the labour force by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage? c. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage?...

Suppose soft drink production at bottling plant is described by the production function: ? =??^?.? where...

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Suppose a country has a money demand function (??)?=?? where k is a constant parameter. The...

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Suppose that the production function is given by: ? = ?(?, ?) = ?(?)^1/3(?)^1/3 where ?...

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2. Consider the Solow growth model. Suppose that the production function is constant returns to scale...

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14. Suppose the production function for cars is ? = 4??^(1/4)?^(3/4)?. The cost of capital is...

14. Suppose the production function for cars is ? = 4??^(1/4)?^(3/4)?. The cost of capital is $10 per hour, and the wage for labor is $15 per hour. If the company wants to produce 1000 cars, what combination of capital and labor should it use: a. 50 units of capital, 25 units of labor b. 25 units of capital, 50 units of labor c. 12.9 units of capital, 58 .1units of labor d. 148.7 units of capita, 297.3 units of...

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