Consider two countries, labeled 1 and 2. Each has the production function Y; = A, KL-a, for i=1,2. Assume that the countries currently have the same GDP per person, L₁= L₂, common saving.population growth, and depreciation rates, and K₁ K₂. Based on this information you know that, in<the long run, GDP per capita in country 1 (₁) isy/2.Ogreater thanless thanO equal toShow Transcribed TextIn the knowledge production function AAt+1 ZAt Lat, the parameter 2 represents and Atcaptures the idea that......O the cost of producing new ideas; get's harder to generate new knowledge over time.Ohow good an economy is at generating knowledge; new ideas are built on old ideas.O the marginal cost of labor; rich (productive) countries have a higher growth rate then poor ones.O the scarcity of skilled labor; small countries are at a disadvantage when it comes to producingnew knowledge.Show Transcribed Textanswer of these two questions

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Consider two countries, labeled 1 and 2. Each has the production function Y; = A, KL, for i = 1, 2. Assume that the countries currently have the same GDP per person, L₁= L₂, common saving. population growth, and depreciation rates, and K₁ the long run, GDP per capita in country 1 (₁) is K₂. Based on this information you know that, in 2. greater than less than equal to Show Transcribed Text In the knowledge production function AA++1 = ZA+Lat. the parameter z represents captures the idea that and A the cost of producing new ideas; it get's harder to generate new knowledge over time. how good an economy is at generating knowledge; new ideas are built on old ideas. the marginal cost of labor, rich (productive) countries have a higher growth rate then poor ones. the scarcity of skilled labor; small countries are at a disadvantage when it comes to producing new knowledge.

Consider two countries, labeled 1 and 2. Each has the production function Y; = A, KL, for i = 1, 2. Assume that the countries currently have the same GDP per person, L₁= L₂, common saving. population growth, and depreciation rates, and K₁ the long run, GDP per capita in country 1 (₁) is K₂. Based on this information you know that, in 2. greater than less than equal to Show Transcribed Text In the knowledge production function AA++1 = ZA+Lat. the parameter z represents captures the idea that and A the cost of producing new ideas; it get's harder to generate new knowledge over time. how good an economy is at generating knowledge; new ideas are built on old ideas. the marginal cost of labor, rich (productive) countries have a higher growth rate then poor ones. the scarcity of skilled labor; small countries are at a disadvantage when it comes to producing new knowledge.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider two countries, labeled 1 and 2. Each has the production function Y; = A, KL-a, for i=1,
2. Assume that the countries currently have the same GDP per person, L₁= L₂, common saving.
population growth, and depreciation rates, and K₁ K₂. Based on this information you know that, in
<
the long run, GDP per capita in country 1 (₁) is
y/2.
Ogreater than
less than
O equal to
Show Transcribed Text
In the knowledge production function AAt+1 ZAt Lat, the parameter 2 represents and At
captures the idea that......
O the cost of producing new ideas; get's harder to generate new knowledge over time.
Ohow good an economy is at generating knowledge; new ideas are built on old ideas.
O the marginal cost of labor; rich (productive) countries have a higher growth rate then poor ones.
O the scarcity of skilled labor; small countries are at a disadvantage when it comes to producing
new knowledge.
Show Transcribed Text
answer of these two questions

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In the Solow growth model, suppose that the per-worker production function is given by y = zk 0.4 with s = 0.15, d = 0.1, and n = 0.02. a. Suppose in country A that z= 1. Calculate the steady-state capital per worker and income per capita in country A. The steady-state capital per worker is (Round to two decimal places as needed.) The steady-state income per capita is. (Round to two decimal places as needed.) b. Suppose in country B that z = 2. Calculate the steady-state capital per worker and income per capita in country B. The steady-state capital per worker is|. (Round to two decimal places as needed.) The steady-state income per capita is (Round to two decimal places as needed.) c. As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential differences in total factor productivity to explain differences in standards of living across countries? Country B is times richer than country A, as measured by GDP per capita. This…
3). Let's consider the Solow Model without technology advancement. Y(t)=2K(t)^(1/2)*L(t)^(1/2) The population growth rate=0.02 Capital accumulation is s*Y(t)-d*K s=0.2, d=0.03 d is the capital depreciation rate. In the steady state, please calculate the following measurements. (a)Capital per capita A. 16 В. 24 С. 36 D. 48 Е. 64 F. None of the above (b)Marginal product of capital (Hint: The first derivative of Y with respect to K) А. 1 В. 1/2 С. 1/4 D. 1/8 E. 1/16 F. None of the above
= 2. Consider a Solow growth model in which the production function is Yt AK²N₁¹/2, where A = 1. Moreover, assume that the depreciation rate is d = 0.02, the rate of population growth is n = 0.02, and the saving rate is s = = 0.2. a. Compute the value of the capital stock per worker in steady state. b. Draw a graph that represents the steady-state equilibrium of the model. c. Suppose that the capital-labor ration in year t is 90. What will the level of the capital- labor ratio be in year t+1? Will it increase or decrease in future periods? Explain. d. Compute the rate of change of the capital labor ratio between time t and t + 1. How does it compare to the rate of growth of the capital-labor ratio in steady state?
Consider the Solow-Swan model of growth. Imagine that the production function is Y = AKªL²-a 1. Use the production function to compute output per capita, y = Y /L, as a function of capital per person, k = K/L. 2. Derive the fundamental equation of the Solow-Swan model. Please show all the steps. Furthermore, imagine that the savings, depreciation, and population growth rates take the values s = 0.3, 8= 0.1 and n =0.01. You do not know the value of A. 3. Use the fundamental equation of the Solow-Swan model to compute the growth rate of capital per person as a function of k. 4. In the steady-state, the growth rate of capital is zero. Using the parameters assumed above, find the steady-state level of the capital stock, k_. 5. Calculate GDP per capita at the steady state. 6. Imagine that this country is in its steady state so its capital stock is k_. Imagine that the country receives a gift of one unit of capital from the world bank (so, suddenly, the capital stock is k_+1). Can you say…
The productivity growth rates of poorer countries tend to be _____ than those of richer countries. Higher Lower increasing slower decreasing faster