Consider the production function: Y = A. K0.8 N0.2 with A = 5, K = 400, N = 3000 (a) What is the level of output produced in this economy? (b) What is the Marginal Product of Labour? (c) What is the Marginal Product of Capital? (d) A unit of output sells for $100? The nominal interest rate is 5%, the expected inflation rate is 3%, the depreciation rate is 13%, and the population growth rate is 2%. If a unit of capital costs $5,000, is the capital market in equilibrium. If not, is there too much or too little capital?

Consider the production function: Y = A. K0.8 N0.2 with A = 5, K = 400, N = 3000 (a) What is the level of output produced in this economy? (b) What is the Marginal Product of Labour? (c) What is the Marginal Product of Capital? (d) A unit of output sells for $100? The nominal interest rate is 5%, the expected inflation rate is 3%, the depreciation rate is 13%, and the population growth rate is 2%. If a unit of capital costs $5,000, is the capital market in equilibrium. If not, is there too much or too little capital?

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

Chapter7: Production Economics

Section: Chapter Questions

Problem 8E

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