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 + BK¹/2 H¹/4L¹/4 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. (f) What will be the growth rate of consumption and investment under these Parameters in the long term? g) Imagine that we have two countries with the same parameters (same A, B, s, d, and n). One of them is rich and the other is poor. Which one of the two will grow faster? Why? Will those two countries eventually catch up? (h) Suppose now that sA > d+ n. Draw the savings and depreciation curves. Under these circumstances, will there be positive growth in the long run? Why? (i) If s = 0.52, A = 1.5, B = 1, d= 0.15, h*= 10000 and n = 0.2, the growth rate converges to some value as time goes to infinity. What is this value? (j) For these specific parameters, say that this country has a GDP (Y) value of $ 300 billion. What is the level of consumption? (k) What will be the GDP next year?

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 + BK¹/2 H¹/4L¹/4 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. (f) What will be the growth rate of consumption and investment under these Parameters in the long term? g) Imagine that we have two countries with the same parameters (same A, B, s, d, and n). One of them is rich and the other is poor. Which one of the two will grow faster? Why? Will those two countries eventually catch up? (h) Suppose now that sA > d+ n. Draw the savings and depreciation curves. Under these circumstances, will there be positive growth in the long run? Why? (i) If s = 0.52, A = 1.5, B = 1, d= 0.15, h*= 10000 and n = 0.2, the growth rate converges to some value as time goes to infinity. What is this value? (j) For these specific parameters, say that this country has a GDP (Y) value of $ 300 billion. What is the level of consumption? (k) What will be the GDP next year?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Bernardo Beefmaster has 50 cull cows that average 1100 Ibs and he purchased them for $60/cwt. He fed the cows for 55 days and sold them at 1260 Ibs for $65/cwt. The cows averaged about 30 lbs of feed per day, and cost $7/cwt. Calculate the average daily gain, feed efficiency (feed:gain), feed only cost of gain, breakeven per pound and total, and the total margin. WHAT IS THE BREAKEVEN VALUE PER POUND?
Bags/Participants Fixed Cost Variable Cost Total Cost 0 $1,700 $ - $1,700 100 $1,700 $500 $2,200 200 $1,700 $1,200 $2,900 300 $1,700 $2,700 $4,400 400 $1,700 $5,200 $6,900 500 $1,700 $9,000 $10,700 600 $1,700 $15,000 $16,700 700 $1,700 $23,800 $25,500 800 $1,700 $36,800 $38,500 900 $1,700 $55,800 $57,500 1,000 $1,700 $83,000 $84,700 Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order? At what quantity of bags will profits be maximized? A Use the profit maximizing rule, MR ≥ MC, buy 300 bags. B Use the profit maximizing rule, MR ≥ MC, buy 200 bags. C Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300. D Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.
One of the steps in engineering economy study is 4. IDENTIFY AN ECONOMIC MEASURE OF WORTH CRITERION FOR DECISION MAKINGWhat does it mean? Please. Help.
True/False Total cost can never be zero
While drawing cost curves, the state of technology must be kept constant True/False
Define the term the implicit "do-nothing" alternative?
What is meant by the implict and explicit cost.
No written by hand solution
Economic cost is equal to the sum of exiplicit and implicit costs. True/ False
Please provide a clear and complete solution. Answer fast for I have 30 minutes left. Thank you very much.
What is the maximum profit for the profit-versus-production function given below? P is profit in dollars and x is units of production. P= $200,000 -0.12 - O (A) $200,000 O (B) $240,000 O (C) $290,000 O (D) $310,000 Remaining Time 4