An economist fits the following production function to data from Australia and New Zealand,Y = AK" L1-«She estimate that for Australia, a == 0.7.She estimates that for New Zealand, a == 0.2Based on this information, which of the following statements is most likely to be correct.There is not enough information to comment on the relative capital intensitiesProduction wilI be relatively more capital intensive in New Zealand than in AustraliaProduction will be relatively more capital intensive in Australia than in New ZealandProduction will be equally as capital intensive in each country since they both experience constant returns toscale

Production function is the equation that expresses how quantities and factors of production are…

Answered: An economist fits the following…

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. If the production function is given by Y=K2L'3 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?
3. Y₁ = 3k+0.5 St = 0.3Yt d = 0.1 n = 0.05 What are the steady-state values of the capital-labor ratio k, output per worker y, and consumption per worker?
Consider an economy with fixed land T that is constant over time. Production is given by: AKTBL1-a-ß Y = Population grows at a rate n and productivity A grows at a rate equal to g. That is, Ĺ = nL and À = gA. Capital accumulates as Ø = I – SK with I = yY. These are assumptions typical of the K Solow model.
Derive the steady state level of capital K*, output Y* and output per capita y* in terms of model parameters (A, 3, L, d, a). Below is the solution Pls explain step by step
9. Suppose there is no population or technological growth. Define k as the capital-to-labor ratio. If the per worker production function is given by y = ¹/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady state capital per worker ratio is (a) 1 (b) 2 (c) 4 (d) 6 9
Consider a country with production function unction ? = 5? 1/2, where y is the output per worker and kis capital per worker. Suppose the investment in capital occurs at a rate of 35% of income perworker every period, the depreciation rate is 1.5% and the population growth rate is 2%. Use excel toplot the production function, investment line and capital depletion line with k on the x-axis (usethe attached spreadsheet to draw your graphs).a. What is the steady state level of y and k.b. Suppose TFP increases by 20%. What happens to the steady state y and k?c. Suppose the investment rate increases to 40%. What happens to the steady state y and k?
You are given the production function Y= AK H14 N 2, where A = 4. The population growth rate n is 0.025, the depreciation rate d is 0.075 (both physical and human capital depreciate at the same rate), and the growth rate of autonomous factors is zero. Investment 1 is the sum of two components, investment in physical capital Ig and investment in human capital Iµ. The fraction of GDP that goes to physical capital investment is SK = 0.05 and the fraction of GDP that goes to human capital investment is SH = 0.05. (i) Convert the production function to a function relating Y/N to both K/N and H/N. (ii) Find the steady-state physical capital-labor ratio and the steady - state human capital - labor ratio. (iii) Find the steady – state per person output. 2.
Problem 5 A “miraculous" Asian economy has an aggregate wage bill of 300 billion dollars and an aggregate GDP of 500 billion. The annual growth rate of aggregate GDP for this economy over the last 10 years was 7 percent (that is AY/Y=0.07) and the growth rate of labor was 6 percent (AL/L=0.06). Imagine that the production function is given by the standard Cobb-Douglas AK“L“. ,а, 1-а Y What are the "capital share (a)" and the "labor share (1 – a)"? b. Imagine that the government controls the national accounts. In its quest to improve its reputation, the government mistakenly thinks that having "a lot of investment" will make it look good so it "inflates" its growth of capital number to 12% (AK/K=0.12). When researchers estimate the rate of productivity growth (AA/A), what will they find? Is the growth rate of technology positive or negative? Does your result in (b) make sense? d. The actual truth is that the growth rate of capital was one half of what it announced. That is, instead of…

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