Over the following decade, the economy experienced several flooding events that destroyed capital but, thankfully, did not kill people. As a result, in year 2020, the stock of capital has fallen to 300 (but the workforce remains unchanged). Compute the equilibrium wage in year 2020. Pick the closest value. Between 7 and 8 O None of the other options Between 15 and 18 Between 2.3 and 6.8 Between 12 and 13 Draw a diagram for the labor market La bel the initial ecuilibrium (vear 2010) as Problem 1 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.

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Chapter1: Making Economics Decisions
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Over the following decade, the economy experienced several flooding events
that destroyed capital but, thankfully, did not kill people. As a result, in year 2020,
the stock of capital has fallen to 300 (but the workforce remains unchanged).
Compute the equilibrium wage in year 2020. Pick the closest value.
Between 7 and 8
O None of the other options
Between 15 and 18
Between 2.3 and 6.8
Between 12 and 13
Draw a diagram for the labor market La bel the initial ecuilibrium (vear 2010) as
Transcribed Image Text:Over the following decade, the economy experienced several flooding events that destroyed capital but, thankfully, did not kill people. As a result, in year 2020, the stock of capital has fallen to 300 (but the workforce remains unchanged). Compute the equilibrium wage in year 2020. Pick the closest value. Between 7 and 8 O None of the other options Between 15 and 18 Between 2.3 and 6.8 Between 12 and 13 Draw a diagram for the labor market La bel the initial ecuilibrium (vear 2010) as
Problem 1
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.
Transcribed Image Text:Problem 1 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.
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