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In class, we derived a relationship between output per capita and the population level N in an economy using the production function Y = KaL¹-a where L = ON. Using the graphical model illustrate the impact of each of the following. Feel free to plug in specific numerical values if you need to check your intuition (for example you can assume that K = 300 N = 500,a = 0.4 and 6 = 0.6) but you do NOT need to use specific numerical values to answer this question accurately a) K increases by a fixed quantity every year, e.g. we add 50 new machines to the economy every year b) There is a change in social norms allowing more women to enter the workforce each year. As a result, increases but by less and less each year, (e.g. o increases to 0.7 then to 0.75 then to 0.78 and then to 0.8) before stabilizing at some value max. c) A serious communicable disease hits the economy, randomly killing half of the overall popu-

In class, we derived a relationship between output per capita and the population level N in an economy using the production function Y = KaL¹-a where L = ON. Using the graphical model illustrate the impact of each of the following. Feel free to plug in specific numerical values if you need to check your intuition (for example you can assume that K = 300 N = 500,a = 0.4 and 6 = 0.6) but you do NOT need to use specific numerical values to answer this question accurately a) K increases by a fixed quantity every year, e.g. we add 50 new machines to the economy every year b) There is a change in social norms allowing more women to enter the workforce each year. As a result, increases but by less and less each year, (e.g. o increases to 0.7 then to 0.75 then to 0.78 and then to 0.8) before stabilizing at some value max. c) A serious communicable disease hits the economy, randomly killing half of the overall popu-

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 1.4CE
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Homework Question 24: Test Driving a New Model is Always Fun In class, we derived a relationship between output per capita and the population level N in an economy using the production function Y = KaL¹-a where L = ON. Using the graphical model illustrate the impact of each of the following. Feel free to plug in specific numerical values if you need to check your intuition (for example you can assume that K = 300 N = 500,a = 0.4 and p = 0.6) but you do NOT need to use specific numerical values to answer this question accurately a) K increases by a fixed quantity every year, e.g. we add 50 new machines to the economy every year b) There is a change in social norms allowing more women to enter the workforce each year. As a result, increases but by less and less each year, (e.g. o increases to 0.7 then to 0.75 then to 0.78 and then to 0.8) before stabilizing at some value max. c) A serious communicable disease hits the economy, randomly killing half of the overall popu- lation. d) A serious communicable disease hits the economy, randomly killing half of the working-age population. e) K and L both grow at a constant rate every year, e.g.. we increase the number of machines and the number of workers by 5% every year. o remains constant.
Transcribed Image Text:Homework Question 24: Test Driving a New Model is Always Fun In class, we derived a relationship between output per capita and the population level N in an economy using the production function Y = KaL¹-a where L = ON. Using the graphical model illustrate the impact of each of the following. Feel free to plug in specific numerical values if you need to check your intuition (for example you can assume that K = 300 N = 500,a = 0.4 and p = 0.6) but you do NOT need to use specific numerical values to answer this question accurately a) K increases by a fixed quantity every year, e.g. we add 50 new machines to the economy every year b) There is a change in social norms allowing more women to enter the workforce each year. As a result, increases but by less and less each year, (e.g. o increases to 0.7 then to 0.75 then to 0.78 and then to 0.8) before stabilizing at some value max. c) A serious communicable disease hits the economy, randomly killing half of the overall popu- lation. d) A serious communicable disease hits the economy, randomly killing half of the working-age population. e) K and L both grow at a constant rate every year, e.g.. we increase the number of machines and the number of workers by 5% every year. o remains constant.
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