The choice between now and one hundred years in the future.

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Answer 1

Question

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

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Consider an economy that exhibits both population growth (L grows at rate n) and technological progress (A grows at rate a) described by the production function, Y = F(K, AL) = Ka (AL)¹-α Here K is capital and Y is output. (a) Show that this production function exhibits constant returns to scale. [2 marks] (b) What is the per-effective-worker production function, y = f(k), (where y = Y/AL k K/AL)? (Show your working.) [2 marks] (c) Find expressions for the steady-state capital-output ratio, capital stock per effective worker, and output per effective worker, as a function of the saving rate (s), the depreciation rate (8), the population growth rate (n), the rate of technological progress (a), and the coefficient a. (You may assume the condition that capital per effective worker evolves according to Ak = sf (k) - (a+n+8)k.) [5 marks] (d) Show that at the Golden Rule steady state the saving rate for this economy is equal to the parameter a. [6 marks]

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In the week-4 materials, when deriving labour supply, we assumed that the substitution effect dominated the income effect. What impact would there be on labour supply if this was not the case? Briefly investigate how such a change could theoretically affect the imposition of a minimum wage above the market clearing wage. (Your answer is likely to benefit from diagrammatic support.)

Answer 2

Question

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Answer 6

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Answer 7

Chapter 2, Problem 1DQ

To determine

The choice between now and one hundred years in the future.

Answer 8

Expert Solution & Answer

Explanation of Solution

The extensive use of oil in today’s world is important because in the modern economy, almost all economic activities are dependent on oil. Moreover, there are many others uses of oil as well.

So, the welfare of the people would be degraded, and there will be stagnation in the economy. No import and export of goods over long distances would be possible, as transportation activity is totally dependent on the availability of fuel.

There are however opportunity costs associated with using alternatives to oil If oil is replaced with ethanol, then it wouldn't cause any damage to the environment and there would be a need to increase the cultivation of sugarcane, as ethanol is produced from sugarcane.

To increase the quantity of land for the cultivation of sugarcane, it would be required to decrease the quantity of land for the cultivation for other crops like rice, wheat, and maize. Therefore, it is important to decide whether ethanol is more important than other crops or not.Thus, there are two aspects that are required to be considered, which are scarcity and the alternative uses of oil.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Opportunity cost:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the respective alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Answer 12

Ch. 2 - Prob. 1DQ Ch. 2 - Prob. 2DQ Ch. 2 - Prob. 3DQ Ch. 2 - Prob. 4DQ Ch. 2 - Suppose you are about to start an innovative,...Ch. 2 - Prob. 6DQ

The choice between now and one hundred years in the future.

The choice between now and one hundred years in the future.

Explanation of Solution

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Chapter 2 Solutions