2 Consider the simple (one-period) production model. The production function is Cobb-Douglas, exhibitsconstant returns to scale, and the exponent on capital equals 0.25.In year 2010, the economy's parameter values were A=50, K=600 and L=600?Compute the equilibrium rental rate. Pick the closest value.Between 12 and 13Between 7 and 8Between 2.3 and 6.8None of the other optionsBetween 15 and 18Over the following decade, the economy experienced immigration. As a result, inyear 2020, the workforce has increased to L=900 (and the other parametersremain as in the previous question). Compute the equilibrium rental rate in year2020. Pick the closest value.Between 12 and 13Between 7 and 8None of the other optionsBetween 2.3 and 6.8O Between 15 and 18

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constant returns to scale, and the exponent on capital equals 0.25. In year 2010, the economy's parameter values were A=50, K=600 and L=6 Compute the equilibrium rental rate. Pick the closest value. Between 12 and 13 O Between 7 and 8 O Between 2.3 and 6.8 O None of the other options

constant returns to scale, and the exponent on capital equals 0.25. In year 2010, the economy's parameter values were A=50, K=600 and L=6 Compute the equilibrium rental rate. Pick the closest value. Between 12 and 13 O Between 7 and 8 O Between 2.3 and 6.8 O None of the other options

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 the simple (one-period) production model. The production function is Cobb-Douglas, exhibits
constant returns to scale, and the exponent on capital equals 0.25.
In year 2010, the economy's parameter values were A=50, K=600 and L=600?
Compute the equilibrium rental rate. Pick the closest value.
Between 12 and 13
Between 7 and 8
Between 2.3 and 6.8
None of the other options
Between 15 and 18
Over the following decade, the economy experienced immigration. As a result, in
year 2020, the workforce has increased to L=900 (and the other parameters
remain as in the previous question). Compute the equilibrium rental rate in year
2020. Pick the closest value.
Between 12 and 13
Between 7 and 8
None of the other options
Between 2.3 and 6.8
O Between 15 and 18

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