4. Suppose an economy described by the Solow model has the following production function: Y=K¹/2 (LE) ¹/2 a. For this economy, what is f(k)? Hae: a colro for the
Q: What evidence supports market efficiencies?
A: The idea of market efficiency is about how well and how rapidly prices in financial markets mirror…
Q: Q Based on the graphical representation, which of the following statements is true? The monopolist…
A: A monopoly is a market arrangement in which one manufacturer or seller controls the whole market.…
Q: PPF 40 4. What is the MARGINAL cost of producing good y? a) 1/4 of a unit of x. b) 1/4 of a unit of…
A: The maximum output combinations of 2 products or services that an economy can generate with its…
Q: Based on the table below answer the following: Points A B C Combinations of sweaters and phones…
A: 1. graph added in explanation .2. from segment AB : 4 sweaters / 1 phone from segment CD : 4…
Q: to eliminate). Player 1 X Y Z A 1,3 4,1 2.3 Player 2 B 2,4 3,1 0.0 strategy C 2,3 5,0 4.2
A: Nash equilibrium is a concept in game theory that describes a situation in which each participant in…
Q: Consider a graph with paper on the x-axis and pencils on the y-axis. If the price of pencils…
A: Budget constraint shows the relationship between the two goods, their prices and the income of the…
Q: 6) Keizen and Tyke live in a small community in Cabarete in the Dominican Republic. For simplicity,…
A: Private Goods: These goods are exclusively consumed by a person when he/she pays for them.…
Q: Boeing and Airbus are duopoly competitors for airplanes. Let us assume that worldwide market demand…
A: Cournot and Bertrand are analytical frameworks in economics for studying firm rivalry. In Cournot,…
Q: Perko manufactures and sells coffee cups. Graphs of the revenue and cost functions are shown below.…
A: An inverted U-shaped revenue curve typically represents a situation where total revenue initially…
Q: The estimated negative cash flows for three design alternatives are shown below. The MARR is 14% per…
A: Incremental rate of return shows how much rate of return one is going to receive because of…
Q: Suppose there are only 3 goods in the consumer basket. Based on the following table, answer the…
A: Part a)The cost of market basket (C) for each year is is:2015:C = $24652016:C = $2253.502017:C =…
Q: What areas of the diagram above represent consumer surplus if the government does not impose any…
A: A price floor is a minimum price set by the government for a service or good. It is implemented to…
Q: A gift shop sells 400 boxes of scented candles a year. The ordering cost is $60 for scented candles,…
A: Economic order quantity refers to the minimum order quantity that a company has without overspending…
Q: Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly…
A: At the maximum level of output, the long-run aggregate supply curve is a vertical line. The long-run…
Q: Answer the following with complete solution What is the production level of X and Y in nation A…
A: 1. Production Levels After Trade:Nation A specializes in producing commodity Y.Nation B specializes…
Q: CBS is selling advertising for its broadcast of the AFC championship game. The station's demand for…
A: Profit is the excess income earned by the producer which is left after paying off all the expenses…
Q: Based on the graph above, at $2, there would be a in this market:
A: Shortage occurs when the quantity demanded is more than the quantity supplied.A surplus occurs when…
Q: Suppose that x is a normal good and y is an inferior good. The Marshallian demand functions for…
A: The Marshallian demand function ,it is named after the economist Alfred Marshall, refers to a basic…
Q: Suppose the nominal interest rate is 0.64 and the expected inflation rate is 0.47 1) What is the…
A: The objective of the question is to calculate the exact and approximate real interest rate given the…
Q: A new runway at chester international airport was recently built at a cost of 16000000. Maintenance…
A: Initial Cost = 16000000Maintenance cost:-Upkeep Cost = 450000 per year5 runway lights maintenance =…
Q: Give a brief explanation of how pricing, quantity, and market demand are related economically.
A: Market demand defines the total quantity of a good or service that all consumers in a particular…
Q: If the daily demand curve for gasoline is as provided in the graph above, then how much consumer…
A: The demand curve shows an inverse relationship between price and quantity demanded. Demand is a…
Q: The following table shows Madison's utility from consuming popcorn and Coke. Suppose that Madison…
A: The total income for Madison is $51. The price of popcorn is $6.The price of coke is $13.5.The…
Q: enter your response here $ Farmer Jones grows oranges in Florida. Suppose the market for oranges is…
A: The objective of the question is to calculate the total revenue, average revenue, and marginal…
Q: 12. The GDP (Gross Domestic Product) of China was $14.34 trillion in 2019, and the GDP of Sweden was…
A: GDP is the gross domestic product which is the market value of final goods and services produced in…
Q: 4. Read the following article: Your Avocados and Olives Are Pricier Because Fat Is In Fashion. a. In…
A: In a competitive market, the popularity of items can significantly impact their prices. When certain…
Q: 3. Productivity and growth policies Consider a hypothetical small island nation in which the only…
A: Productivity refers to the effective utilisation of resources like labour and capital to maximise…
Q: The inverse demand function for apples in a country Dictatorestan is defined by the equation p = 214…
A: The inverse demand function for apples: Inverse supply equation for apples: p=7+4q.Here p denotes…
Q: What areas of the diagram above represent the surplus transferred from consumers to producers with a…
A: BCFHere's why:The price floor (P1) is a horizontal line that acts as a minimum price at which goods…
Q: Consider the following static game represented in matrix form, labeled "P." Player 2 Player 1…
A: The objective of the question is to analyze a game theory matrix and determine the type of game,…
Q: Consider the basic AD/AS model, and suppose there is a positive output gap. If a contractionary…
A: AD/AS is a widely used macroeconomic model to determine short-run economic changes. This model is…
Q: 1 Suppose that y = Ak4, the capital-labor ratio is $55,000 per worker, the level of total factor…
A: The production function is given as The capital-labor ratio is $55000.The total factor productivity…
Q: Give correct explanation and answer
A: Dear student, kindly check the answer in the explanation box below.Explanation:Dear student, below…
Q: Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the…
A: Here Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for…
Q: Assume the economies natural rate of unemployment is 4.5% (this is generally what the United States…
A: Unemployment refers to the state of being without a paid job (i.e. out of work), but actively…
Q: For this question do not use units in your answer. Background pollution is 40 ppm, pollution from…
A: Abatement cost:When any firm or industry emits pollution then they pay the cost for the loss they…
Q: There is a decrease in the number of buyers wishing to purchase cheddar snack crackers. How will…
A: The issue introduced in the picture is tied in with understanding how a decrease in the number of…
Q: Use AD/AS model to solve the following problems. You have to DRAW and explain AD/AS model. Hydraulic…
A: The AD/AS (Aggregate Demand/Aggregate Supply) model is a way to show how national income, output,…
Q: An individual sets aside a certain amount of his income per month to spend on his two hobbies,…
A: This theory explores how individuals make purchasing decisions considering their limited income(Y)…
Q: The table below shows the marginal private benefits and the marginal private costs of steel…
A: The quantity produced, marginal private benefit and marginal private costs are given below. Quantity…
Q: Suppose that a firm's long-run average total costs of producing smart phones increases as it…
A: The objective of the question is to identify the economic concept that describes a situation where a…
Q: Which of the following factors would impact a buyer's reservation price for a given good or service?…
A: In economics, the reservation price (also known as walk-away price or indifference price) represents…
Q: (a) Consider an agricultural-based economy where there are many farmers planting tobacco plants in…
A: Since you have posted multiple independent questions, according to the guidelines, only the first…
Q: Total cost is the
A: Cost refers to the value of resources used/ cost incurred to produce a good or service. It’s the…
Q: What impact do small business owners have on the country’s economy?
A: The objective of this question is to understand the role and impact of small businesses on a…
Q: Let's consider a company is evaluating a potential investment project: The Project requires an…
A: The IRR (internal rate of return) but it uses a various reinvestment rate assumption. The IRR…
Q: In the market for widgets, consumers have a market demand (marginal benefit) curve of P = MB = 250-…
A: Since you have posted a question with multiple sub-parts, we will provide the solution to only the…
Q: 6. Who should pay the tax? The following graph gives the labor market for laboratory aides in the…
A: Demand-supply equilibrium:The demand function reflects an individual’s willingness to pay for each…
Q: Use the photo at exercise 14 to solve the problem below With the Firm Y response function…
A: In economics, the game of Stackelberg, two players with the leading and trailing firms function in…
Q: COST PER UNIT LRAC SRATC SRATC QUANTITY OF OUTPUT O Shut down O Shift to operate on SRATC₁ O Stay on…
A: The following graph shows five short-run average total cost curve and a long-run average total cost…
answer part a, b and c please!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
- Problem 1. Consider the Solow-Swan growth model, with a savings rate, s, a depreciation rate, 8, and a population growth rate, n. The production function is given by Y = AK + BK³3/4L1/4 where A and B are positive constants. Note that this production is a mixture of Romer's AK model and the neoclassical Cobb- Douglas production function. • (i) Does this production function exhibit constant returns to scale? Explain why. (ii) Does it exhibit diminishing returns to physical capital? Explain why. • (ii) Express output per person, y =- as a function of capital per person, k =. • (iv) Write down an expression for y/k as a function of k and graph. (Hint: as k goes to infinity, does the ratio y/k approach zero?) (v) Use the production function in per capita terms to write the fundamental equation of the Solow-Swan model. • (vi) Suppose first that sA 8 + n. Draw the savings and depreciation curves, making sure to label the steady state level of capital(if it exists). Under these circumstances,…Problem 1. Consider the Solow-Swan growth model, with a savings rate, s, a depreciation rate, 8, and a population growth rate, n. The production function is given by Y = AK + BK³3/4L1/4 where A and B are positive constants. Note that this production is a mixture of Romer's AK model and the neoclassical Cobb- Douglas production function. • (i) Does this production function exhibit constant returns to scale? Explain why. • (ii) Does it exhibit diminishing returns to physical capital? Explain why. (iii) Express output per person, y =, as a function of capital per person, k =. • (iv) Write down an expression for y/k as a function of k and graph. (Hint: as k goes to infinity, does the ratio y/k approach zero?) (v) Use the production function in per capita terms to write the fundamental equation of the Solow-Swan model. • (vi) Suppose first that sA 8 + n. Draw the savings and depreciation curves, making sure to label the steady state level of capital(if it exists). Under these…4. Suppose that the Indonesian economy can be explained by the Solow model using the following production function: Y = K (LE) ² , where E is the efficiency of labor. a. Derive the production function reflecting per-efficiency-unit-of-labor (in this case; y = fik) = Y/EL). b. Use the answer in (a) to find the steady-state value of y as a function of s, n , g, and d. c. Now suppose that the Malaysian economy also has the above production functions, but they have different parameter values. Indonesia has a savings rate of 28 percent and a population growth of 1 percent per year. While Malaysia has a savings rate of 10 percent and a population growth of 4 percent per year. Both Indonesia and Malaysia have g = 0.02 and d = 0.04. Determine the steady-state values of y in the two states.
- Country A and country B both have the production function Y= F(K,L)= K 1/2 L 1/2 Assume that neither country experiences population growth nor technological progress and that 5% of capital depreciates each year. Assume further that country A saves 10% of output each year and country B saves 20% of output each year. Using your answer from part (a) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker for each country. Then find the steady-state levels of income per worker and consumption per worker. (b) Suppose that both countries start off with a capital per stock per worker of 2. What are the levels of income per worker and consumption per worker? Remembering that the change in the capital stock is investment less depreciation, use a calculator to show how the capital stock per worker will evolve over time in both countries. For each year, calculate income per worker and…Use the Solow model below to answer the question. Y Y₂ Y₁ K₁ K₂ K3 Y = Af (K, H) dK SY K Suppose that Y₁ is 1,458, Y₂ is 5,898, and Y3 is 11,618. The savings rate for this economy is 18% and the depreciation rate is 5.4%. If this economy is currently at a GDP of 1,458, what is the smallest amount of foreign aid which would move the economy up to a GDP of 11,618? Assume that all foreign aid becomes investment. Round your final answer to two decimal places.1. Consider the economy of Avataria, which can be described by the Solow model. Avataria has the depreciation rate of 8% and the production function Y(K,L)= 10(K)¹/4 (L) 3/4. Part 1. The steady-state equilibrium in the Solow Model (a) Prove that the production function in Avataria exhibits the constant return to scale property. (b) Assume that Avataria has the investment rate of 16%. Calculate the steady-state capital-labor ratio, output per worker, and consumption per worker. Also, what is the growth rate of the total output in Avataria in the steady state?
- Consider a Solow-Swan economy with a Cobb-Douglas production function. Imagine that the savings rate "s" is an increasing function of capital and it has the following functional form: for low values of k the savings rate is constant at some low level. For intermediate levels of k, the savings rate increases rapidly. For high values of k the savings rate is constant again. In other words, the savings rate looks like: Does a steady state necessarily exist? b. Will the steady state be necessarily unique? а. Will the steady state(s) be stable? d. Will there be a "poverty trap"? (define poverty trap) С. How can this model be used (and how has this model been used) to justify large increases in foreign development aid? Discuss THREE potential flaws of the "savings poverty trap" model. е. f.Exercise 4: Growth and capital over-accumulationSuppose two countries, A and B, with the same production function Y = KαL1−α. Thevalue of α is 0.30, the growth rate of population is 2% and the depreciation rate is 5%.a) Show that with price-taking firms the share of labor must be 1 − α.b) Compute the stock of capital, output and consumption per unit of labor in the steadystate if the savings rates were 25% for country A and 35% for country B.c) Compare both economies to the Golden Rule.d) Explain what would happen to both countries if suddenly their savings rate becamethe Golden Rule savings rate.20) Suppose that the production function is y = k0.25[that is, output per worker is equal to the (1/4th) root of capital per worker], s = 0.36, and lowercase delta (5)[the depreciation rate] = 0.10 and the population growth is 2 percent (n = 0.02). What is (approximately) the per capita steady state %3D consumption in this economy? Select one: а. 5004 b. 1.45 С. 302 d. 0.92
- Consider the Production Function: Y=√K√N a) Derive the steady-state levels of output per worker and capital per worker in terms of the saving rate (s) and the depreciation rate.b) Derive the equation for steady-state output per worker and steady-state consumption per worker in terms of the saving rate (s) and the depreciation rate.c) Suppose depreciation is 5% and savings rate is 10%. Calculate the steady-state output per worker.d) Now suppose the savings rate increases to 20%. What is the new steady-state output per worker?Why Capital does not Flow from Rich to Emerging Countries? We assume that the production function in country i is 1 1 2 Yi = A ² k², (1) where y, and ki are output and capital per capita, respectively, in country i, and A is a measure of technology in country i. (a) Calculate the marginal product of capital (MPK) denoted by Ri in country i. (b) Express the MPK in terms of output per capita, yi, i.e., eliminate ki from Ri by using the production function (1). (c) We consider two countries, indexed by i 1 and i 2, whose production function is described by (1). Both are assumed to have the same level of productivity, i.e., A₁ A2. We assume y2 50y₁. Calculate the ratio R₁/R₂. (d) We keep assuming that y2 50y1, but now we assume that A2 educational attainment is higher in country 2. Calculate the ratio R₁/R₂ under 10A₁ because these assumptions. FX = - (e) We keep assuming y2 50y₁ but now we consider that technology in country 1 is a function of technology of the more advanced country 2,…Use the Solow model below to answer the question. Y Y3 Y₂ Y₁ K₁₁ K₂ K3 Y = Af(K,H) dk SY K Suppose that Y₁ is 1,475, Y₂ is 6,184, and Y3 is 10,992. The savings rate for this economy is 30% and the depreciation rate is 8.2%. If this economy is currently at a GDP of 1,475, what is the smallest amount of foreign aid which would move the economy up to a GDP of 10,992? Assume that all foreign aid becomes investment. Round your final answer to two decimal places.