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4. Solving the production model: Suppose the production function at the core of our model is given by Y = A KAL4 (that is, assume the exponents on capital and labor are 3/4 and 1/4 rather than 1/3 and 2/3). (a) Create a new version of Table 4.1 for the new version of the model. What are the five equations and five unknowns? (Hint: The hiring rules for capital and labor will change in the obvious way.) (b) Now solve these equations to get the solution to the model. Put your solution in the same form as Table 4.2. (c) What is the solution for the equilibrium level of output per person?

4. Solving the production model: Suppose the production function at the core of our model is given by Y = A KAL4 (that is, assume the exponents on capital and labor are 3/4 and 1/4 rather than 1/3 and 2/3). (a) Create a new version of Table 4.1 for the new version of the model. What are the five equations and five unknowns? (Hint: The hiring rules for capital and labor will change in the obvious way.) (b) Now solve these equations to get the solution to the model. Put your solution in the same form as Table 4.2. (c) What is the solution for the equilibrium level of output per person?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4. Solving the production model: Suppose the production function at the core of our model is given by Y = A K4L4 (that is, assume the exponents on capital and labor are 3/4 and 1/4 rather than 1/3 and 2/3). (a) Create a new version of Table 4.1 for the new version of the model. What are the five equations and five unknowns? (Hint: The hiring rules for capital and labor will change in the obvious way.) (b) Now solve these equations to get the solution to the model. Put your solution in the same form as Table 4.2. (c) What is the solution for the equilibrium level of output per person?
Transcribed Image Text:4. Solving the production model: Suppose the production function at the core of our model is given by Y = A K4L4 (that is, assume the exponents on capital and labor are 3/4 and 1/4 rather than 1/3 and 2/3). (a) Create a new version of Table 4.1 for the new version of the model. What are the five equations and five unknowns? (Hint: The hiring rules for capital and labor will change in the obvious way.) (b) Now solve these equations to get the solution to the model. Put your solution in the same form as Table 4.2. (c) What is the solution for the equilibrium level of output per person?
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