Consider a closed economy. The production function per capita given by the following expression: 3h =...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider a closed economy. The production function per capita given by the following expression: 3h = Ak Where k, and ye are capital per capita and output per capita respectively at date t. a. Describe as accurately as possible the various properties of this function. What does the term A, represent? b. Plot this function in the plane (key) c. Suppose that in the long run, the capital per capita is constant and has a value k. It is known as the steady state of the economy. Represent graphically the steady state in the plane (ke, t). e. On the same graph as above, show the consequences of an increase in A, on k and f(k). Explain the impact of an increase in A, on income per capita. f. Let two countries, A and B, be represented by the production function given above and assume that A, is the same in both countries at each date t. It is also assumed that the savings rate and capital depreciation rate are identical in both countries. Initially, both countries' capital stock per capital is less than k, but country A has more capital per capita than country B. In which country is the growth rate of y, faster in the short run? In the long run? g. Suppose that in country A the term A, is growing faster than in country B. How does it change the answer you gave to the previous question? Consider a closed economy. The production function per capita given by the following expression: 3h = Ak Where k, and ye are capital per capita and output per capita respectively at date t. a. Describe as accurately as possible the various properties of this function. What does the term A, represent? b. Plot this function in the plane (key) c. Suppose that in the long run, the capital per capita is constant and has a value k. It is known as the steady state of the economy. Represent graphically the steady state in the plane (ke, t). e. On the same graph as above, show the consequences of an increase in A, on k and f(k). Explain the impact of an increase in A, on income per capita. f. Let two countries, A and B, be represented by the production function given above and assume that A, is the same in both countries at each date t. It is also assumed that the savings rate and capital depreciation rate are identical in both countries. Initially, both countries' capital stock per capital is less than k, but country A has more capital per capita than country B. In which country is the growth rate of y, faster in the short run? In the long run? g. Suppose that in country A the term A, is growing faster than in country B. How does it change the answer you gave to the previous question?
Expert Answer:
Answer rating: 100% (QA)
a Properties of the production function h Ak It is a simple CobbDouglas production function with constant returns to scale It is a linear relationship ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these physics questions
-
In a certain economy the production function is Y = A(100N - 0.5N2), Where Y is output, A is productivity, and N is total hours worked. The marginal product of labour associated with this production...
-
Consider a closed economy in which GDP equals $20 billion, consumption equals $13 billion,government purchases equal $3 billon and tax revenue equals $1 billion. Use this informationto answer the...
-
Consider a closed economy in the long run. C = 150 + 0.6 (Y-T) I = 300 - 10r G = 500 T = 250 And a natural rate of output of 1,750. Show savings and investment on a well labelled diagram with the...
-
Nanette works for Piroz and is paid a basic wage of $1,000 a week. Piroz operates the following bonus scheme: (1) Each employee gets a bonus of $4 for every unit they produce in excess of 2,000 units...
-
Recently, Lexus introduced a "Pebble Beach" edition of the Lexus ES model. Go to the Lexus Web site (www.lexus.com) and research the marketing relationship between Lexus and the Pebble Beach Resort....
-
Hi I would please need help with this questions - what Project Aristotle found to be most important for team effectiveness. - which is the most important of these factors, and WHY? - How will you use...
-
The promoter of the film venture offers a new investment designed to attract reluctant investors. One unit of this new investment has a payoff of three times the original investment if the venture is...
-
In the spring of each year, Steinbrook Colleges theater department puts on a contemporary play. Before the performance, the theater manager instructs student volunteers in their duties as cashier,...
-
Consider the network with the indicated link costs as shown in Figure 1. i k k Figure 1 i denote the third last digit of your student ID. If the digit is "0", it is replaced with "10". j denote the...
-
John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2020, John worked as a computer technician at a local university earning a salary of $152,000, and...
-
Mrs.Swati 's trial balance was as follows. Trial Balance for the year ended 31" March, 2016 Debit Balances Amt Amt 1,04,000 1,95,300 11,300 28,000 24,200 62,400 48,300 6,300 25,100 30,000 4,500 9,300...
-
The cost function for maintenance is y = 1 2 0 x + 6 0 0 . The cost driver activity is the number of maintenance hours. What is the total cost of 4 hours of maintenance work?
-
William has $219,000 in taxable income this year. Tax Bracket 8% 15% 23% 31% 35% 43% Bottom of Bracket Top of Bracket $0 $10,200 $45,200 $115,200 $115,200 $215,200 $215,200 $415,200 $415,200 $10,200...
-
Drawings Account is A . Nominal Account B . Personal Account C . Real Account D . Fictitious Account
-
Trial balance checks A . arithmetical accuracy of accounting entries B . equality of all assets and liabilities C . all types of errors D . valuation of closing stock
-
Public and Private Goods In a New Year Pary, you need to decide how much money to spend on cans of beer (b, standing for the number of cans of beer) and how much to spend on fireworks (f, standing...
-
John Law, a dairy farmer, and his wife retired to the Sunshine Coast of Queensland in 2015 with $3.5 million in cash. They planned to spend some of their retirement years travelling the world in...
-
A local politician is concerned that a program for the homeless in her city is discriminating against blacks and other minorities. The following data were taken from a random sample of black and...
-
On September 14, 2012, Jay purchased a passenger automobile that is used 75 percent in his accounting business. The automobile has a basis for depreciation purposes of $35,000, and Jay uses the...
-
Marty is a sales consultant. Marty incurs the following expenses related to entertainment of his clients in 2012: Dues to a country club......................................................$4,500...
-
Olive Corporation was formed and began operations on January 1, 2012. The corporation's income statement for the year and the balance sheet at year-end are presented below. The corporation made...
-
Give four examples of goods or services that have exhibited inflation in recent years.
-
What is the numeric value of the present worth of the original project (i.e., no changes)? a. -10 b. 20 c. 1,000 d. Cannot be determined from the information given
-
Electronic Games is moving very quickly to introduce a new interrelated set of video games. The initial investment for equipment to produce the necessary electronic components is \($9\) million, with...
Study smarter with the SolutionInn App