Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 5, Problem 9E
To determine
What is the NNP for the below economy?
| Consumption | $400 |
| Imports | $10 |
| Net investment | $20 |
| Government purchases | $100 |
| Exports | $20 |
| Capital consumption allowance | $20 |
| Statistical discrepancy | $6 |
| Receipts of factor income from the rest of the world | $10 |
| Payments of factor income to the rest of the world | $13 |
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evaluate the impact of government interventions, such as antitrust regulations, price controls, or subsidies, on various market structures. Select a specific industry and examine how these interventions have influenced competition, consumer welfare, and economic efficiency. Provide the pros and cons of government intervention.
Consider an economy that exhibits both population growth (L grows at rate n) and
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Y = F(K, AL) = Ka (AL)¹-α
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[5 marks]
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[6 marks]
A firm faces the following production function,
Y = AKα L¹-a
(1)
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The firm uses an optimal amount of capital determined by the condition,
MPK = r +8
(2)
Where MPK is the marginal productivity of capital, r is the real interest rate, and ♪ is
the depreciation rate.
(a) Using equations (1) and (2) find an expression for K*, the optimal amount of
capital the firm should use.
[3 marks]
(b) Referring to your result from part (a), comment on what happens to K* when
each of the following variables change (holding other variables constant),
(i)
The measure of technology (A) falls
(ii)
The depreciation rate (8) increases
(iii)
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[2 marks]
[2 marks]
[2 marks]
[Hint: For each of parts (i)-(iii) you are being asked to comment on what happens to
K* if just the variable mentioned in the question part changes. Your answer should
state whether K* increases, decreases, or stays the…
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