2. The production function and economic growth The production function of a hypothatical economy is Q-T(L,K) The Q stands for Real GDP; the T stands for the technology coefficient; the stands for labor, and the K stands for capital. The graphical representation of this production function is given as follows. (ol 400 TRI 34 Suppose that the economy is currently at Point A, where: Q-0.5(4,5) LABOR (L) Now suppose the economy moves to Paint 8 on the graph. Which of the following expressions is most likely to represent the new Real GDP 09-05 (5,5) 09-03 (4.5) 09-05 (3,5) 09-07 (45) Which of the following could plausibly cause the change you just observed? O Advances in technology O A rise in labor taxis O A decline in the economy's technological capabilities Afin labora (?)
Q: The following table shows some data for an economy that produces only 2 goods: bread and butter.…
A: National income analysis is an important statistic for measuring the health of an economy since it…
Q: Using an AD/AS diagram (starting from long-run/full employment equilibrium), graphically show and…
A: The link between the amount of a product provided and its price, while maintaining other variables…
Q: Edmund loves lollipops and hates oatmeal. To induce him to eat enough oatmeal and to restrain him…
A: This can be defined as a concept that shows from the available fixed resources to the consumer how…
Q: Figure 6-21 15 12 Price 105 120 S₂ Demand 160 Quantity Refer to Figure 6-21. How is the burden of…
A: Tax refers to a mandatory financial charge or levy imposed by a government on individuals,…
Q: Which of the following is not a characteristic of monopolistically competitive firms in the long…
A: In a competitive market, there are many firms that are selling unique products but are operating…
Q: Suppose firms become very optimistic about future business conditions and invest heavily in new…
A: Investment expenditure, also referred to as gross private domestic investment, encompasses the…
Q: How might a thriving entrepreneurial sector have a positive impact on the trade balance?
A: Trade balance refers to the numerical difference between a nation's exports and imports, reflecting…
Q: Scenario 1. Assume the following information for an imaginary, closed economy. GDP-$110,000;…
A: The close economy refers to economy that does not have economic relations with rest of world. The…
Q: The cost, C, to produce a product as a function of the quantity, q, is given by…
A: The objective of the question is to find the quantity that minimizes the cost of production. This is…
Q: Using the cost data for Project X and Project Y below, conduct a Present Worth Analysis to calculate…
A: Cash flow:The net amount of cash or cash equivalents that enters and exits a business or financial…
Q: To economists, the main difference between the short run and the long run is that: Question 17…
A: In economics, the short-run and long-run perspectives are typically used to analyse a corporation.…
Q: You have the opportunity to get a VEGGIE Café franchise (this specializes in BOCA veggie Burgers and…
A: Economic Profit: Economic profit is the total revenue of a business minus both explicit and implicit…
Q: Suppose that a firm produces baseball bats in a monopolistically competitive market. The following…
A: A market in which they do not have perfect substitutes for one another and have multiple similar…
Q: $16T $14T $12T SIOT S8T 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 a) Calculate the rate…
A: Inflation is the general increase in price level over a period of time.
Q: The table below reports production and cost data for a local bakery. Workers 1 2 3 4 5 6 7 8 9 10…
A: Competitive firm is one kind of firm which competes with another firm but with identical goods and…
Q: The slope of isocost AB is greater than the slope of isocost CD. Units of capital 80 60 A 0 BD E 60…
A: In economics, an isocost refers to a term derived from the combination of the words "iso" (meaning…
Q: 18.Graphically illustrate an economy experiencing a recessionary gap in the short-run and discuss…
A: In terms of its ability to alleviate economic downturns through government intervention,…
Q: Consider the following graph: Price and cost (per necklace) 280.00 240.00- 220.00 200.00 180.00…
A: In a monopoly market, an individual or company has exclusive power to determine market prices…
Q: BN8.2 Why don't Cities charge each Individual their Marginal Benefit (MB) to distribute Public…
A: Public goods are prone to market failure because their non-excludable and non-rivalrous nature makes…
Q: Three neighboring towns – Marshland, Dampland, and Wetland – all border the same lake.…
A: Marginal benefit refers to the additional benefit consumers receive from the additional consumption…
Q: Suppose Abercrombie & Fitch sells clothing in a monopolistically competitive market and that a…
A: In economics, perfect competition is a hypothetical market structure in which all firms sell…
Q: 2. (Measures of Risk Aversion in EUT) In class we discussed the Arrow-Pratt coefficient of absolute…
A: Absolute Risk Aversion refers to the level of risk an individual can accept.Relative Risk Aversion…
Q: Your firm, Content Colleague, is similar to Happy Worker, a Canadian company that designs and…
A: A company produces and designs collectibles and toys. The estimated demand function of the stuffed…
Q: 1. Suppose that the long-run real interest rate is 1% and the Fed has an inflation target of 2% (a)…
A: Nominal interest rate is one kind of interest which is levied on any kind of loan or investment. But…
Q: 1. Compare the GDP per capita ranking and HDI ranking between Bhutan and Thailand in 2022. Which…
A: A society that is more rich and economically developed is indicated by a higher GDP per capita…
Q: 56. Consider the following cash flow profile and assume MARR is 10 percent/year. EOY NCF 0 $101 1…
A: Cash flow:The net amount of cash or cash equivalents that enters and exits a business or financial…
Q: The graph shows the marginal private benefit from a law degree and the marginal cost of obtaining a…
A: Marginal social benefit is a net benefit or net satisfaction received by consumers after the…
Q: Consider the market for gasoline. Suppose the market demand and supply curves are as given below. In…
A: Market demand : Market demand is the specific quantity of a product that consumers can afford and…
Q: A firm could produce three units if it decides the market price makes it valuable enough to do so.…
A: The study and analysis of commercial difficulties impacting businesses using abstract economic…
Q: How much tea is gained and what is the cost in coffee? a. In moving from U to v b. In moving from W…
A: A production possibility curve depicts the combination of two goods that can be produced using the…
Q: Ten firms compete in a market to sell product X. The total sales of all firms selling the product…
A: One metric used to evaluate market concentration in a particular sector is the four-firm…
Q: As the price of cookies increases, firms that produce cookies will: Multiple Choice O O O increase…
A: With regards to the market for treats, the law of supply recommends that makers, like treat…
Q: The figure below shows the cost and revenue curves faced by a monopolist. The profit-maximizing…
A: This can be defined as a cost that shows the type of cost that an individual, business, or any other…
Q: Degree of operating leverage. One question. Example: The accounting manager of Gateway Inns has…
A: The degree of operating leverage (DOL) measures the sensitivity of operating cash flow to changes in…
Q: Which of the following factors would cause the break-even point to change? a) Fixed operating costs…
A: The objective of this question is to identify which factors would cause the break-even point to…
Q: , Consider a nation that is too small to have any influence on world prices. The domestic timber…
A: Equilibrium price and quantity are those values of quantity and price when demand and supply curves…
Q: The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in…
A: Macroeconomic research provides a comprehensive forecast for the fiscal landscapes of entire…
Q: What is the impact on US imports when oil prices increase (or decrease)?
A: The question is asking about the impact on US imports when oil prices fluctuate. The United States…
Q: What is the difference between the balance of trade and the balance of payments? Multiple Choice The…
A: The balance of payments (BOP) refers to a systematic record of all the economic transactions that is…
Q: An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The…
A: Simple payback period refers to the amount of time it takes to recover the cost of an investment. In…
Q: prices of goods x and y are each $1. Jane has $20 to spend and is considering choosing 10 units of x…
A: The Budget line represents the different combinations of two goods that are affordable with given…
Q: # # # # # 360 320 # # # PRICE (Dollars per headset) 280 240 200 2 8 Demand Supply 75 150 225 300 379…
A: The link between the amount of a product provided and its price, while maintaining other variables…
Q: Based on the following graph (which summarizes the demand, marginal revenue, and relevant costs for…
A: A single seller in the market for goods is called a monopoly market. The marginal revenue is the…
Q: A firm has the production function ƒ(x, y) = x0.90y0.80 This firm has constant returns to scale.…
A: This can be described as a concept that shows the graphical representation that shows the different…
Q: There are 50 residents that live in a small town in California. Each resident uses electricity and…
A: The demand equation for the electricity is given asThe supply equation for the electricity is given…
Q: 1. Sources of monopoly power Monopolists, unlike competitive firms, have some market power. A…
A: Monopoly refers to a market structure which has only one firm. The firm produces unique good. There…
Q: réponse. a. This game is similar to the prisoner dilemma. b. Players do not always play the same…
A: The given game is a simultaneous move game between two players, having only two possible choices C…
Q: 3. Relationship between tax revenues, deadweight loss, and demand elasticity The government is…
A: The government to plans to implement tax on either the windbreakers or the bucket hats of $25. The…
Q: Consider a market with (inverse) demand and supply curves given by: P = 100 - QD and p = 3Qs What is…
A: Consumer surplus is the area below the demand curve and above the equilibrium price level.Producer…
Q: 1. Price $152 $144 $136 $128 $120 $112 $104 $96 $88 $80 $72 564 $56 $48 $40 $32 524 $16 $8 SO 0 25…
A: DISCLAIMER “Since you have asked multiple questions, we will solve the first three questions for…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
- Assume that a country's production function is Y= AKº³Lº7. The ratio of capital to output is 3, the growth rate of output is 3 percent, and the depreciation rate is 4 percent. Capital is paid its marginal product. a. What is the marginal product of capital in this situation? (Hint: The marginal product of capital may be computed using calculus by differentiating the production function and using the capital-output ratio or by using the fact that capital's share equals MPK multiplied by K divided by Y.) b. If the economy is in a steady state, what must be the saving rate? (Hint: The saving rate multiplied by Y must provide for gross growth of (8 + n + g)K, where 8 is the depreciation rate.) c. If the economy decides to achieve the Golden Rule level of capital and actually reaches it, what will be the marginal product of capital? d. What must the saving rate be to achieve the Golden Rule level of capital?1. Country A and B both have the production functionY = F (K, L) = K ½L ½or Y = K0.5 L0.5 a) What is the per-worker production function, y= f (k)? Please make sure to write specificfunctional form of the per-worker production function. b) Assume that neither country experiences population growth nor technological progressand that 4 percent of capital depreciates each year. Assume further that country A saves 24percent of output each year and country B saves 16 percent of output each year. Using youranswer from part a) and the steady-state condition, find the steady-state level of capital perworker for each country. Then find the steady-state levels of income per worker for eachcountry and steady-state level of consumption per worker for each country.2. An economy has a production function:Yt = 3(squaredKt)(squaredLt). The economy has a saving rate of 24 percent, a depreciation rate of 3 percent,and Lt = 1 for all period (no population growth). There is no technologicalprogress. (a) What is the per-worker production function, yt = f(kt)? Define yt =YtLtand kt =KtLt.(b) Find the equation for the evolution of capital per worker in terms of ktand kt+1. (c) Find the long-run growth rate of output per worker. Now the economy has the following production function:Yt = 3Kt but savings rate, depreciation rate, and population remain the same. (d) What is the per-worker production function, yt = f(kt)? Define yt =Yt/Lt (e) Find the equation for the evolution of capital per worker in terms of ktand kt+1. (f) Find the long-run growth rate of output per worker. (g) Explain why the economy with production function (2) explain persistent growth without the assumption of exogenous technologicalprogress. How does this differ from the economy…
- Give typing answer with explanation and conclusion The production function is given by Y=AK, where K is the capital stock and A denotes the level of technology and equals 1.2 (the rate of technological progress equals 0). The rate of population growth is 2% and people save 15% of their incomes. The capital stock is 12000 and consumption of fixed capital is equal to 120 (and it always represents this percentage of the capital stock). Calculate the rate of growth of output per worker.as Figure 11-1 D Real GDP per hour worked, YIL v $40 IC 8 T 1 60 Production function, Production function, Production function, Capital per hour worked, KIL Refer to Figure 11-1. Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from Production function 1 to Production function 2 from Production function 2 to Production function 1. from Production function 1 to Production function 3. up along any of the production functionsFigure 11-4 Real GDP per hour worked, Y/L $17,000 16,400 16,000 15,000 $50,000 B E 60,000 70,000 Production function3 Production function2 Production function Capital per hour worked, K/L 16) Refer to Figure 11-4. The movement from E to B to D in the figure above illustrates A) an improvement in technology. B) a decline in capital per worker. C) diminishing returns to capital. D) diminishing returns to labor.
- The table below shows the GDP of a country measured in trillions of dollars. What is the growth rate of the GDP of this country in 1999? Year 1998 1999 2000 2001 Profit $526.42 $527.10 $533.69 $541.70 O a) -0.02% O b) 0.04% O c) 0.08% O d) 0.13% O e) 0.18% O f) 0.25% g) There is not enough information to tell.e here to search ? 2 2 3 S 1. Consider the following production function: Y=F(K, L) = A(2K + 3L) Does this production function exhibit constant returns to scale? 2. Suppose the table represents the production function of both Mexico and Spain. Use the following information to answer the next question. K = Capital (trillions) Y = Output (trillions) Country L = Population (millions) Mexico 3 Spain E D 105 3. Calculate per capita income for both countries. 4 45 2. Calculate total factor productivity for both countries using Equation 3. Equation 3: Y = F(KL) = AK0.3 L0.7 R 4. Explain the difference in per capita income. % 0.18 0.74 5 6 hip & T Y 1 G H a 00 1.0 W 1.7 39 FocusSuppose the production function in an economy is Y = K0.SL05, where K is the amount of capital and L is the amount of labor. The economy begins with 25 units of capital and 25 units of labor. Round answers to two places after the decimal when necessary. a. How much output does the economy produce? units of output
- 5. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 2.4%, the rate of depreciation of capital (8) is equal to 3%, the number of workers grow at 0.7% per year and the rate of technological progress is 3%. (a) Find the steady state values of: i. 11. capital stock per effective worker output per effective worker growth rate of output per effective worker5.2 Consider the following economy: FYI: for this production function.() = A Parameter Value Investment rate (0) 3% Depreciation rate (8) 5% Population growth (9₁) 2% Productivity level (A) 25 Productivity Growth (ga) 4% Currently, the economy has a labour force of 5,000 and a capital stock equal to 15,000. 5.2.1 Calculate this country's current rate of economic growth. 5.2.2 How fast will country grow annually once its steady state is reached? 12 Y = AK3L3Question 27Refer to Figure 1. Suppose the per-worker production function in the figure above represents the production function for the U.S. economy. If the United States decided to double its support of university research, this would cause a movement fromn.