QUESTION TWO Suppose that the production function is a Cobb-Douglas given below Y=F (K,L) = AKª L!-a a) Solve for the share of income paid to capital show your working. b) Say a = 0.3, and suppose that immigration raises the labor force by 10 percent. What happens to i. Total output (in percentage change) ii. The real rental price of capital (in percentage change) The real wage (in percentage change) c) Say a = 0.3, and suppose that a gift of capital from abroad raises the capital stock by 10 percent. What happens to Total output (in percentage change) The real rental price of capital (in percentage change) iii. iii. ii. The real wage (in percentage change) d) Say a = 0.3, and suppose that a technological advance raises the value of the parameter A by 10%. What happens to Total output (in percentage change) ii. The real rental price of capital (in percentage change) The real wage (in percentage change) i. iii.

QUESTION TWO Suppose that the production function is a Cobb-Douglas given below Y=F (K,L) = AKª L!-a a) Solve for the share of income paid to capital show your working. b) Say a = 0.3, and suppose that immigration raises the labor force by 10 percent. What happens to i. Total output (in percentage change) ii. The real rental price of capital (in percentage change) The real wage (in percentage change) c) Say a = 0.3, and suppose that a gift of capital from abroad raises the capital stock by 10 percent. What happens to Total output (in percentage change) The real rental price of capital (in percentage change) iii. iii. ii. The real wage (in percentage change) d) Say a = 0.3, and suppose that a technological advance raises the value of the parameter A by 10%. What happens to Total output (in percentage change) ii. The real rental price of capital (in percentage change) The real wage (in percentage change) i. iii.

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

What is the central economic proplem?
what is the key difference between classical economic and Pre-classical economics?
You are a fresh graduate who is being interviewed by an investment bank for a position of analyst. In order to assess your capabilities, the bank has asked you to conduct a macroeconomic analysis. The analysis should lead to a recommendation where you recommend a country for stock market investment. More specifically, you are required to do the choosing Brasil and Argentina 1. Identify at least ten macroeconomic variables. a. Chose the variables in a way that they help you in making good recommendation. 2. Compare the chosen macroeconomic variables over the last five years. a. It is really important for you to utilize charts to show the behavior of chosen variables. b. It is probably better to put both countries on the same chart so that the reader can see how the two countries are doing against each other.
Draw the circular flow diagram of 4 main components (Agents) of macroeconomics and clearly show the interaction among them.
Define macroeconomics.
how business cycle models and growth models are connected at the frontierof macroeconomics.
What kind of macroeconomic policy should India follow?
With the help of a concrete example explain the macro environment of a business organization
How are John Maynard Keynes economic theories applied?
CLIMATE CHANGE – what are the macro factors impacted and provide examples.
Distinguish between the following concepts as they apply to Elements of Macroeconomics. Give examples to support your answers a. Economic Growth and Economic Development b. Stock Variable and Flow Variable