Economics Today (19th Edition)
19th Edition
ISBN: 9780134478777
Author: Roger LeRoy Miller
Publisher: PEARSON
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Chapter 17, Problem 17.1LO
To determine
Why the actual
Expert Solution & Answer
Explanation of Solution
Natural rate of unemployment is the rate of temporary unemployment, thus that unemployment which is natural in a stable economy. There is a time lag when people switch from one job to another. Unemployment in that time period for the same set of people is called the natural rate of unemployment.
In the logical sense, the actual rate of unemployment is bound to differ from the natural rate in the sense that the actual rate includes all those who are willing to work and cannot find work, whereas natural rate consist of unemployment by choice or temporary unemployment.
Thus, actual unemployment rate departs from its natural rate because of the conceptual difference and the difference in the analysis.
Economics Concept Introduction
Introduction:
Natural Rate of Unemployment - When people switch jobs, there is a time lag and the unemployment of people during that time lag is called Natural rate of Unemployment. It is the combination of structural and frictional unemployment.
Actual Rate of Unemployment - It is the rate of unemployment of those people who want to work at the existing wage rate but are not able to find the work. Unemployment rate can be determined by dividing the number of unemployed by the total labor force.
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2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.
3. Consider the following estimated regression equation, estimated using a sample of firms, where RDis total firm spending on research and development in USD ($), Revenue is total firm revenuein USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors inparentheses):RDd = 1000(600)+ 0.5(0.1)Revenue + 1.5(0.5)W ages,(a) Interpret the coefficients on each of the explanatory variables. (b) Which of the three coefficients are statistically significant at the 5% level of significance? Howdo you know? A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients onthe explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),and reports a p-value of 0.045.(c) What does this p-value mean for the outcome of the test? (d) What would an appropriate two-sided alternative hypothesis look like?
Chapter 17 Solutions
Economics Today (19th Edition)
Ch. 17 - Prob. 17.1LOCh. 17 - Prob. 17.2LOCh. 17 - Prob. 17.3LOCh. 17 - Prob. 17.4LOCh. 17 - Prob. 17.5LOCh. 17 - Prob. aFCTCh. 17 - Prob. bFCTCh. 17 - Prob. cFCTCh. 17 - Prob. 1CTQCh. 17 - Prob. 2CTQ
Ch. 17 - Prob. 1FCTCh. 17 - Prob. 2FCTCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5PCh. 17 - Prob. 6PCh. 17 - Prob. 7PCh. 17 - Prob. 8PCh. 17 - Prob. 9PCh. 17 - Prob. 10PCh. 17 - Prob. 11PCh. 17 - Prob. 12PCh. 17 - Prob. 13PCh. 17 - Prob. 14PCh. 17 - Prob. 15PCh. 17 - Prob. 16PCh. 17 - Prob. 17PCh. 17 - Prob. 18PCh. 17 - Prob. 19PCh. 17 - Prob. 20PCh. 17 - Prob. 21P
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