spring 1. Consider the following Cobb-Douglas production function: Y = AK³L¹. (1) Both factors of production are assumed to be exogenously given and fixed over time. In partic- ular, the available capital for production is K = 10 and the readily available labor is L = 270. While the total factor productivity is given at A = 54. The size of production in this economy is (a) 800 (b) 1,620 (c) 2520 (d) 14,580 (e) not enough information is given (c) 108; 108 (d) 2, 108 (e) 108, 2 _units. 2. Using the information from question (1) before, it is possible to calculate the real rental price of capital (R/P) and the real wage rate (W/P). R/P = and W/P = (a) 2; 2 (b) 53; 72 3. Using the information from question (1) before, we can calculate the real capital income to be units, while the real labor income to be units. (a) 108; 2 (b) 216; 4 (c) 540; 1080 (d) 1080, 540 (e) 2, 108

spring 1. Consider the following Cobb-Douglas production function: Y = AK³L¹. (1) Both factors of production are assumed to be exogenously given and fixed over time. In partic- ular, the available capital for production is K = 10 and the readily available labor is L = 270. While the total factor productivity is given at A = 54. The size of production in this economy is (a) 800 (b) 1,620 (c) 2520 (d) 14,580 (e) not enough information is given (c) 108; 108 (d) 2, 108 (e) 108, 2 _units. 2. Using the information from question (1) before, it is possible to calculate the real rental price of capital (R/P) and the real wage rate (W/P). R/P = and W/P = (a) 2; 2 (b) 53; 72 3. Using the information from question (1) before, we can calculate the real capital income to be units, while the real labor income to be units. (a) 108; 2 (b) 216; 4 (c) 540; 1080 (d) 1080, 540 (e) 2, 108

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

Chapter7: Production Economics

Section: Chapter Questions

Problem 1.5CE

See similar textbooks

Related questions

Q: Output Y is produced according to Y = F(K, L), where K is the capital stock and L is the number of…

A: Solow Growth Model Introduction-:…

Q: • A firm's production function is initially Q = VKL Over time, the production function changes to Q…

A: The initial production function is: The marginal products are:

Q: A business whose only inputs are labour and capital expands its employment level in the long run…

A: Returns to scale refers to the proportionate change in the output due to some proportionate change…

Q: Suppose a Cobb-Douglas Production function is given by the following: P(L, K) = 70L0.9K®1 where L is…

A: Cob-Douglas production function is a special production function used in economics to indicate the…

Q: Suppose that the production function is q=f(L, K) = La + Kª, where a>0. For what range of values of…

A: The production function exhibits increasing returns to scale when the increase in input by 'm' times…

Q: You are a manager for Herman Miller-a major manufacturer of office furniture. You recently hired an…

A: Production function is the function of combination of inputs used and output produced. The short run…

Q: 1. Consider the Cobb-Douglas production funetion f(K,L) = cK"L*, where a, b, and e are constants…

A: Given information Cobb Douglas production f(K,L)=cKaLb a, b and c is constant and greater than 0

Q: Suppose the production function takes the form F(K, L) = The capital share is equal to: ⒸĀK 13 L L+K…

A: The change in production due to an increase in capital by one unit is known as MPK(marginal product…

Q: For a production function q= f(K, L) = K^1/3 L^1/3 and factor prices w=8 and r=1, answer the…

A: Returns to scale refer to the change in output that occurs when all inputs (capital, K, and labor,…

Q: Consider a Cobb-Douglas production function, Y=zKα(Nd)1−α, with 0< α <1. (a) Show that this…

A: From this, it follows that production function shows a constant return to scale.

Q: Q) The production function Q = L1/2K exhibits: Group of answer choices a) Increasing…

A: Given Production function Q= L1/2K .......... (1) To know the return to scale, we increase…

Q: or each of the following production functions, determine whether it exhibits increasing, constant or…

A: The link between inputs (often labor and capital) and the output of goods or services generated by a…

Q: Consider the production function Y=z.K^1/3,N^1/3,L^1/3 where Y is output, z is a parameter…

A: The production function is expressed as a mathematical function. It depicts the relationship between…

Q: en the following production function: q = 10KL. Assume that w = 25, r = 75 and C = 1200. (a)…

A: The production function shows the relationship between the output and inputs. q = 10KLThe output is…

Q: Consider the augmented production function Y equals A K to the power of 1 divided by 3 end exponent…

A: The average product of labor (APL) is a measure used in economics to calculate the average output or…

Q: How would you determine that a two-input Cobb-Douglas production function has decreasing returns to…

A: Answer to the question is as follows :

Q: Q = A Lx Ky (Quantity, A, Labor, Capital) If A; X; Y are all positive numbers, does the…

A: The production function exhibits Increasing return to scale, Constant return to scale or Decreasing…

Q: how that the two-input Cobb-Douglas production function (attached) has decreasing return in scale…

A: Answer to the question is as follows :

Q: If the production function is Q = K5L.5 and capital is fixed at 1 unit, then the average product of…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: For the production function Qs = K0.4L0.1 find the returns to scale, recall that a doubling of…

A: Return to scale: It tells us that if we increase capital and labor by a factor of 't', then how much…

Q: Two countries, X & Y both have the production function f(k) = k0.5 but X starts with an initial k…

A: Production function describes the relationship between the inputs used in production and the output…

Q: The Cobb-Douglas production function is a classic model from economics used to model output as a…

A: A budget constraint refers to the limit on the amount of goods or services that a person, business,…

Question

spring 2023
1. Consider the following Cobb-Douglas production function:
Y = AK³L¹.
(1)
Both factors of production are assumed to be exogenously given and fixed over time. In partic-
ular, the available capital for production is K = 10 and the readily available labor is L = 270.
While the total factor productivity is given at A = 54.
The size of production in this economy is
(a) 800
(b) 1,620
(c) 2520
(d) 14,580
(e) not enough information is given
units.
2. Using the information from question (1) before, it is possible to calculate the real rental price of
capital (R/P) and the real wage rate (W/P). R/P =
and W/P =
(a) 2; 2
(b) 53; 72
(c) 108; 108
(d) 2, 108
(e) 108, 2
3. Using the information from question (1) before, we can calculate the real capital income to be
units, while the real labor income to be.
units.
(a) 108; 2
(b) 216; 4
(c) 540; 1080
(d) 1080, 540
(e) 2, 108

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Output Y is produced according to Y = F(K, L), where K is the capital stock and Lis the number of workers. The production function F(K, L) has constant returns toscale and diminishing marginal returns to capital and labour individually. The levelof technology is assumed to be constant over time. Capital per worker is denotedby k = K/L and output per worker by y = Y/L, and the two are related according toy = f(k), where f(k) = F(k, 1) is the per-worker production function. Investment is equal to saving, which is a constant fraction s of income Y. Capitaldepreciates at rate δ and the number of workers grows at rate n. The change incapital per worker over time is ∆k = sf(k) − (δ + n)k. Consider a country that has reached its steady-state capital per worker. Then, inone year, the country suffers severe flooding that destroys part of its capital stock.Assume this is treated as a one-off event that is not expected to reoccur. explain what happens to incomeper worker in the short run and the…
K 0.25 (AL) 0.75, where technology A grows at Given the following aggregate production function: Y = a fixed rate: = g> 0 (a) Obtain the marginal product of capital algebraically, also discussing the second derivative. (b) Transform the production function into efficiency-worker terms, showing how =ỹ depends AL K on =k. AL
Problem 7 This homework is about returns to scale. Labor, L, and capital, K, are the only inputs in each of the following production functions: 91 = (L+ K')² a 92 = (VI + VR)* b (20 + VT + vR)* 93 = For each production function, use a spreadsheet to find the joutput associated with the following output combinations: L 2, K = 2; L=4, K = 4; and L= 8, K = 8. Determine whether each production unction exhibits increasing returns to scale, decreasing returns to scale, constant returns to scale, or variable returns to scale of this range.
Given the following aggregate production function: Y = K0.25 (AL) 0.75, where technology A grows at a fixed rate: = g> 0 (a) Obtain the marginal product of capital algebraically, also discussing the second derivative. (b) Transform the production function into efficiency-worker terms, showing how =ỹ depends AL on =k. K AL
Two countries, X & Y both have the production function f(k) = k0.5 but X starts with an initial k of 4 while Y starts with initial k of 16. Both of the countries have the same values for these exogeneous variables: s = 0.2, A = 1, depreciation rate = 0.05, n = 0, L0 = 10. As you can see, X starts out with just 25% as much capital as Y. How many periods does it take before X has at least 50% as much capital as Y? (A spreadsheet will help a lot with this)
type plz
Optimize the Cobb-Douglas production function given the following parameters. The maximum about of money available to spend is $1, 600 where the price of K = 12 and the price of L = 6. That is Pk = 12 and Pl = 6. The function is given as q = K0.4L0.6. Using the Lagrangian method, what are the optimal values of K0 and L0?
Please don't copy
Suppose that the production function is given by Y=AK0.4N0.6. What is the percentage change in output if TFP declines by 43%? Write the answer in percent terms with up to two decimals (e.g., 10.22 for 10.22%, or 2.33 for 2.33%).
The Cobb-Douglas production function is a classic model from economics used to model output as a function of capital and labor. It has the form f(L, C)=²1C²2 where co. ₁, and care constants. The variable L represents the units of input of labor and the variable C represents the units of input of capital. (a) In this example, assume co5, c, 0.25, and c₂-0.75. Assume sach unit of labor costs $25 and each unit of capital costs $75. With $70,000 available in the budget, devalop an optimization model for determining how the budgeted amount should be allocated between capital and labor in order to maximize output. Max s.t. L, CZO € 70,000 (b) Find the optimal solution to the model you formulated in part (a). What is the optimal solution value (in units)? (Hint: When using Excel Solver, use the bounds 0S LS 3,000 and 0 s Cs 1,000. Round your answers to the nearest integer when necessary.) units at (L. C)=(
*0.65 0.35 where x is the amount of labor and y is the amount of capital. The productivity of a country is given by f(x,y) = 100x (a) Compute the marginal productivities of labor and capital when x = 300 and y = 500. (b) Use part (a) to determine the approximate effect on productivity of increasing capital from 500 to 502 units, while keeping labor fixed at 300 units. (c) What would be the approximate effect of decreasing labor from 300 to 298.5 units while keeping capital fixed at 500 units? (a) The marginal productivity of labor is (Do not round until the final answer. Then round to two decimal places as needed.) The marginal productivity of capital is (Do not round until the final answer. Then round to two decimal places as needed.) (b) When capital is increased from 500 to 502 units, the approximate change in productivity is (Do not round until the final answer. Then round to two decimal places as needed.) (c) When labor is decreased from 300 to 298.5 units, the approximate change…
1) The Cobb-Douglas production function is y = 22, with a > 0 and 3 > 0. Show that MP₁ = ay/2₁, MP₂ = By/22. What is the MRT S21? How does it vary with: (a) y:; (b) 22/21-