An economy is currently at it's steady state. Their depreciation rate is 10.5% and their capital stock is 1,237. What will be their level of investment? Do not round until your final answer, when you may round to two decimal places.
An economy is currently at it's steady state. Their depreciation rate is 10.5% and their capital stock is 1,237. What will be their level of investment? Do not round until your final answer, when you may round to two decimal places.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 1.4CE
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![**Question: Steady State Economy Investment Calculation**
An economy is currently at its steady state. Their depreciation rate is 10.5% and their capital stock is 1,237. What will be their level of investment?
**Instructions:**
Do not round until your final answer, when you may round to two decimal places.
**Answer Box:**
[ ]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6387f1fe-f7de-460c-a439-51c8967659dd%2F8b0b3da3-c976-47e4-bb41-ddc3f9d2726f%2Fow47y2q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question: Steady State Economy Investment Calculation**
An economy is currently at its steady state. Their depreciation rate is 10.5% and their capital stock is 1,237. What will be their level of investment?
**Instructions:**
Do not round until your final answer, when you may round to two decimal places.
**Answer Box:**
[ ]
![**Marginal Product of Labor Calculation**
The marginal product of labor for a firm is given by the formula:
\[ \text{MPL} = 118 - 3H \]
where \( H \) represents the number of hours they hire workers to work.
**Example Calculations:**
- The marginal product of the first hour of labor would be:
\[ \text{MPL} = 118 - 3 \times 1 = 115 \]
- The marginal product of the second hour of labor would be:
\[ \text{MPL} = 118 - 3 \times 2 = 112 \]
**Problem Statement:**
If the market wage is $19 per hour, how many hours of labor will this firm hire?
*Instructions:*
- Round your final answer to two decimal places.
*Response Box:*
_______
**Solution Outline:**
1. Set up the equation where the marginal product of labor (MPL) is equal to the market wage:
\[ 118 - 3H = 19 \]
2. Solve for \( H \):
\[ 118 - 19 = 3H \]
\[ 99 = 3H \]
\[ H = \frac{99}{3} \]
\[ H = 33 \]
Therefore, the firm will hire 33 hours of labor.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6387f1fe-f7de-460c-a439-51c8967659dd%2F8b0b3da3-c976-47e4-bb41-ddc3f9d2726f%2F1g1c6t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Marginal Product of Labor Calculation**
The marginal product of labor for a firm is given by the formula:
\[ \text{MPL} = 118 - 3H \]
where \( H \) represents the number of hours they hire workers to work.
**Example Calculations:**
- The marginal product of the first hour of labor would be:
\[ \text{MPL} = 118 - 3 \times 1 = 115 \]
- The marginal product of the second hour of labor would be:
\[ \text{MPL} = 118 - 3 \times 2 = 112 \]
**Problem Statement:**
If the market wage is $19 per hour, how many hours of labor will this firm hire?
*Instructions:*
- Round your final answer to two decimal places.
*Response Box:*
_______
**Solution Outline:**
1. Set up the equation where the marginal product of labor (MPL) is equal to the market wage:
\[ 118 - 3H = 19 \]
2. Solve for \( H \):
\[ 118 - 19 = 3H \]
\[ 99 = 3H \]
\[ H = \frac{99}{3} \]
\[ H = 33 \]
Therefore, the firm will hire 33 hours of labor.
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