Output in an economy is given by the production function, Y=A(UKK) 0.30 (UN) 0.70, where Y is output and A measures productivity. The capital stock K is fixed at 30, and employment N is fixed at 103. The utilization rates of capital and labor equal 1 in both 2012 and 2013. Output equals 116 in 2012 and equals 122.96 in 2013. The values of the Solow residual as measured by the parameter A are found to be 1.6306 in 2012 and 1.7284 in the year 2013. Thus the growth rate of the Solow residual is 6.00%. Now suppose that betweeen 2012 and 2013, utilization of both capital and labor each increase by 4%. Output in 2013 is 122.96, as it was above. Calculate the new measure of A in the year 2013: (Enter your response rounded to four decimal places.)

Output in an economy is given by the production function, Y=A(UKK) 0.30 (UN) 0.70, where Y is output and A measures productivity. The capital stock K is fixed at 30, and employment N is fixed at 103. The utilization rates of capital and labor equal 1 in both 2012 and 2013. Output equals 116 in 2012 and equals 122.96 in 2013. The values of the Solow residual as measured by the parameter A are found to be 1.6306 in 2012 and 1.7284 in the year 2013. Thus the growth rate of the Solow residual is 6.00%. Now suppose that betweeen 2012 and 2013, utilization of both capital and labor each increase by 4%. Output in 2013 is 122.96, as it was above. Calculate the new measure of A in the year 2013: (Enter your response rounded to four decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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