Exercise 4: AK Model One of the first models of endogenous growth was the AK model, which proposes to treat the workas if it were another type of capital. In this way, the model proposes the following production function: F(K) = AK. In this model, capital does not have diminishing marginal returns, but constant marginal returns. Prove each question mathematically a) Although the production function is different, suppose that the saving rate is still s, that the population grows at rate n and that capital depreciates at rate 8. Write down what is the growth rate of capital per capita in this economy, that is, in other words, obtain where k(t)=L(1) b) Calculate the growth rate of K. c) Imagine that the depreciation rate is 0.05, that the population growth rate is 0.04 and that A = 1. What is the steady state level of output per capita and capital per capita?

Exercise 4: AK Model One of the first models of endogenous growth was the AK model, which proposes to treat the workas if it were another type of capital. In this way, the model proposes the following production function: F(K) = AK. In this model, capital does not have diminishing marginal returns, but constant marginal returns. Prove each question mathematically a) Although the production function is different, suppose that the saving rate is still s, that the population grows at rate n and that capital depreciates at rate 8. Write down what is the growth rate of capital per capita in this economy, that is, in other words, obtain where k(t)=L(1) b) Calculate the growth rate of K. c) Imagine that the depreciation rate is 0.05, that the population growth rate is 0.04 and that A = 1. What is the steady state level of output per capita and capital per capita?

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

There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed in the attached table. If the tenants have the right to be free of loud music enforced through a property rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. Zero B. One C. Two D. Three E. It depends on transaction costs
why choose A?
What are the Revenue projects?
There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. Assume the bar owner has the right to hire as many bands as she likes. Iftransaction costs were $90, split between the bar owner and the tenants, how manybands would play? What would social welfare be? A. Three bands would play and social welfare would be ‐100.B. Two bands would play and social welfare would be 75.C. Two bands would play and social welfare would be ‐15.D. No bands would play and social welfare would be 0.E. Three bands would play and social welfare would be ‐190
There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. If the tenants have the right to be free of loud music enforced through aproperty rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. ZeroB. OneC. TwoD. ThreeE. It depends on transaction costs
E2
Businesses that offer repayment plans for purchases are required by law to disclose the interest rate. But that dosent mean they let you go out of there way to let you know what it is. you have to read all the paper work. Find the interest rate for the follwing purchase. For a 312 square- foot family room, you choose carpert that costs $1.44 per square foot. The tax rate is 6.1% and youre offered 24 payemnts of 27.61. Round to one decimal, if necessary.