On a new sheet of paper show the work for each question. Suppose the economy of an island behaves as the Solow model, version 1.0 (constant population). The production function is Cobb-Douglas (with constant returns to scale) and the exponent on capital is 0.4. Further, the productivity parameter is 50 (A), the depreciation rate is 10% (d), the savings (investment) rate is 20% (s), and the labor force (L) is equal to 50 million (and constant over time). Suppose in year 2020 the economy is in a steady state. Compute the 2020 values for income per worker (Y/L) and the wage (w). Recall that the wage is given by the MPL. Pick the best choice from the options below. Per-worker income is higher than 330 and lower than 500. The wage is between 220 and 350. Per-worker income is higher than 900 and lower than 1,150. The wage is between 610 and 660. Per-worker income is higher than 520 and lower than 610. The wage coincides with per-worker income. Per-worker income is higher than 550 and lower than 820. The wage is between 420 and 490.

On a new sheet of paper show the work for each question. Suppose the economy of an island behaves as the Solow model, version 1.0 (constant population). The production function is Cobb-Douglas (with constant returns to scale) and the exponent on capital is 0.4. Further, the productivity parameter is 50 (A), the depreciation rate is 10% (d), the savings (investment) rate is 20% (s), and the labor force (L) is equal to 50 million (and constant over time). Suppose in year 2020 the economy is in a steady state. Compute the 2020 values for income per worker (Y/L) and the wage (w). Recall that the wage is given by the MPL. Pick the best choice from the options below. Per-worker income is higher than 330 and lower than 500. The wage is between 220 and 350. Per-worker income is higher than 900 and lower than 1,150. The wage is between 610 and 660. Per-worker income is higher than 520 and lower than 610. The wage coincides with per-worker income. Per-worker income is higher than 550 and lower than 820. The wage is between 420 and 490.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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