A. Consider the one-country model of technological growth from Section 8.3 of the textbook. Suppose that...
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A. Consider the one-country model of technological growth from Section 8.3 of the textbook. Suppose that this country has 1,000 workers, and a third of these workers are employed in the R&D sector. The cost of innovation is u = 5,000. Calculate the growth rate of output per worker. (3 points) B. Now, suppose that in a particular year the share of workers in the R&D sector increased to a half of the labor force and remained at this level forever. What is the new growth rate of output per worker? What does it mean for the level of output in this particular year? (3 points) C. Now, consider the 2-country model of technological growth from Section 8.3 of the textbook. Suppose that the technological leader has 1,000 workers and 30% of its labor force working in the R&D sector, while the technological follower has 2,000 workers but only 15% of its workers employed in the R&D sector. The cost of innovation is μ = 50, while the cost of copying is µμc = 100* (A₁/A₂)-0.25. Calculate the steady-state ratio of technology in Country 1 to technology in Country 2. (4 points) A. Consider the one-country model of technological growth from Section 8.3 of the textbook. Suppose that this country has 1,000 workers, and a third of these workers are employed in the R&D sector. The cost of innovation is u = 5,000. Calculate the growth rate of output per worker. (3 points) B. Now, suppose that in a particular year the share of workers in the R&D sector increased to a half of the labor force and remained at this level forever. What is the new growth rate of output per worker? What does it mean for the level of output in this particular year? (3 points) C. Now, consider the 2-country model of technological growth from Section 8.3 of the textbook. Suppose that the technological leader has 1,000 workers and 30% of its labor force working in the R&D sector, while the technological follower has 2,000 workers but only 15% of its workers employed in the R&D sector. The cost of innovation is μ = 50, while the cost of copying is µμc = 100* (A₁/A₂)-0.25. Calculate the steady-state ratio of technology in Country 1 to technology in Country 2. (4 points)
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