For this question use this aggregate production function as a model of output. Y=Ax/K xL The marginal product of capital can be defined as the extra output (Y) that would be produced if you increased the capital (K) by one unit. For simplicity assume A=L=1: Fill in the MPK for each level of capital in the table. K MPK 1 2 What do you notice about the MPK as K increases while L and A are held fixed? O it gets smaller and smaller O it gets larger and larger

For this question use this aggregate production function as a model of output. Y=Ax/K xL The marginal product of capital can be defined as the extra output (Y) that would be produced if you increased the capital (K) by one unit. For simplicity assume A=L=1: Fill in the MPK for each level of capital in the table. K MPK 1 2 What do you notice about the MPK as K increases while L and A are held fixed? O it gets smaller and smaller O it gets larger and larger

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider an economy in which the consumption, investment and production functions are as follows.C = 90 + 0:7(Y - T)I = 250 - 20r F(K;L) = AK1=2L1=2The capital and labor supply are equal to 100 each, A=10, G = 200 and T = 200. Compute theequilibrium values of output, overall labor income, consumption, public savings, national savings,investment, and the interest rate.Suppose now government spending decreases to G=100 (everything else stays the same). Whathappens to output, consumption, savings, investment and the interest rate? Compute the newvalues for these variables.
The graphs below depict the initial market for labor (on the left) and the macroeconomic production function (on the right). You will use these graphs to identify the effect of an increase in the number of available workers on employment, Potential GDP, and per-worker productivity. Suppose that a substantial increase in labor force participation increases the supply of labor by 40,000 workers at every value of the real wage. (1) Identify the effect of this event on equilibrium employment in the market for labor, and identify the specific new equilibrium level of employment. (2) Identify the effect of this event on Potential GDP, and identify the specific new level of Potential GDP. (3) Finally, identify the effect of this event on per-worker productivity, and identify the specific new level of per-worker productivity. You should embed a graph that clearly depicts (1) the correct supply shift in the market for labor, (2) the new equilibrium real wage, and (3) the new equilibrium…
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Question: Suppose that the marginal cost of extracting a non-renewable natural resource is MXC(Q) = 10 and the marginal beneÖt of using the resource are MB(Q) = 90Q. In the context of a static model, address the following question: Calculate the efficient value of Q if the total stock of the natural resource is Q = 50: Provide a graphical representation of the solution. My Note: This is my first time resubmitting, I was told to confirm that MXC(Q) =10 is the correct form of the Marginal cost of extraction to answer this question correctly. I'm not sure but this is the way my professor asked his question.
Write the following system of equations in the matrix form AX = B;where. Quesiton is in the image
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In class we argued that if people could accumulate human as well as physical capital, the production function would look like the “AK” production function. • (a) If the production function is AK and the savings rate is constant at rate “s”, and the rates of depreciation and populati on growth are δ and n respectively, what would the growth rate of the economy be? • (b) What would be the macroeconomic consequences of decreasing the savings rate in this economy? • (c) What would be the consequences of an increase in fertility in this economy? • (d) Would the consequences of decreasing fertility be UNAMBIGUOUSLY GOOD? • (e) Can human capital grow without bounds? Explain why or why not (make sure you discuss the physical nature of human capital). • (f) What is the growth rate of the economy (in the absence of technological progress) if human capital cannot grow without bounds?
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In the United States economy, there is a great deal of focus on technological advancements. These advances are said to increase worker productivity (like Zoom) or increase the productivity of capital (such as technology that makes the supply chain more efficient).What effect does advancement in technology have on the equilibrium real rental price and capital, assuming that the supply of capital is fixed? Explain, using the terms in the production function, how you know this to be true.
1. Consider an economy that operates under competitive markets and meets the assumptions of the Solow model. The production function is given as follows: Y(t) = K (t) 0.3 (A(t)L(t)) ⁰.7 Assume a saving rate of 15%, labor force growth rate of 2% and depreciation rate of 5% and effectiveness of labor growth rate of 8%. a. Show that the production function exhibit constant return to scale? b. Derive the production function for output per capita. c. Derive the production function for output per effective unit of labor. d. Find equilibrium real wage as a function of capital per unit of effective labor and effectiveness of labor. e. Find equilibrium real rental price of capital as a function of capital per unit of effective labor and effectiveness of labor. f. Solve for steady state level of capital per unit of effective labor. g. Find steady state level of output per unit of effective labor. h. Find growth rate of output and output per worker on the balanced growth path. i. Which one would…
Suppose you are given the aggregate production function for an economy and the amount of available technology increases for this economy. If labor and capital constant are held constant, increase in technology will causes labor productivity to decrease. True False
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