Calculate the value of the marginal product of capital

Assignment Help Macroeconomics
Reference no: EM13321702

Calculating the Marginal Product of Labor and the Marginal Product of Capital

Suppose that the production function for the economy is: Assume that real GDP is $12,000 billion, the capital stock is $40,000 billion, and the labor supply is 200 billion hours.

Y = AK1/2L1/2.

a. Calculate the value of the marginal product of capital. Given this value, if the capital stock increases by $1 billion, by how much will real GDP increase?

b. Calculate the value for the marginal product of labor. Given this value, if the labor supply increases by one hour, by how much will real GDP increase?

Reference no: EM13321702

Questions Cloud

What is the marginal product of labor : Suppose that the production function is Y = A K1/4L3/4.What is the marginal product of labor (MPL)?
Why does it have the shape that you have drawn : Draw a graph of the aggregate production function with capital, K, on the horizontal axis. Why does it have the shape that you have drawn?
What is total factor productivity and how is it calculated : Suppose that it is known that labor receives 25% of national income. With a Cobb-Douglas production function and an initial level of real GDP of $10,000, what happens to real GDP if both capital and labor double?
Is total factor productivity growth also the most important : Real GDP per hour worked in the United States grew by 2.17% per year from 1949 to 2009, and capital per hour worked grew at the rate of 2.27% per year during the same years.
Calculate the value of the marginal product of capital : Suppose that the production function for the economy is: Assume that real GDP is $12,000 billion, the capital stock is $40,000 billion, and the labor supply is 200 billion hours.
What would be the equilibrium quantity if texas air had : Suppose the airline industry consisted of only two firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) = 40q. Assume that the demand curve for the industry is given by P = 100- Q and that each firm expects the ot..
The marginal cost of both firms increases : Suppose that two competing firms, A and B, produce a homogeneous good. Both firms have a marginal cost of MC = $50. Describe what would happen to output and price in each of the following situations if the firms are at (i) Cournot equilibrium, (ii) c..
Find the cournot-nash equilibrium : Returning to the duopoly of part (b),suppose Firm 1 abides by the agreement but Firm 2 cheats by increasing production. How many widgets will Firm 2 produce? What will be each firm"s profits?
Calculate the profit-maximizing price and quantity for this : Suppose a second firm enters the market. Let Ql be the output of the first firm and Q2 be the output of the second. Market demand is now given by Ql + Q2 = 53-P Assuming that this second firm has the same costs as the first, write the profits of each..

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  How much is surplus is lost when there is a monopoly

PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly. how much is surplus is lost (deadweight loss) when there is a monopoly

  Find garfieldís optimal choice of lasagna

The price of Canadian-grown peaches skyrockets during an unusually cold summer that reduces the size of the peach harvest and Technological improvements in the microchip lead to price reductions for personal computers and an increase in computer sale..

  Analyze the two proposals using net future worth analysis

Utilities which operate nuclear power plants are required to placefunds into a "Nuclear Decommissioning Fund" in order to be surethat adequate funds are available to decommission the plant at theend of its useful life.

  What is the total amount of us government debt

What is the total amount of US government debt as of the time you look it up?

  What economic disadvantage associated with product variety

Why is an increase in the number of varieties of a good regarded as a gain from trade? Can you think of economic disadvantages associated with greater product variety? Explain. Is the distinction between "intra-industry trade" and "inter industry t..

  Which price stability takes precedence

A central bank with a dual mandate will achieve lower unemployment in the long run than a central bank with a hierarchical mandate in which price stability takes precedence. Is this statement true, false, or uncertain?

  Description of scarcity

Explain the trade-offs between any three of these options. In other words, what will you gain, and what will you have to give up if you choose each of the three options?

  What do the tablet markets and the cell phone markets have

What do the tablet markets and the cell phone markets have in common What are the different strategies for each of the four ps that tablet companies could use as a result of the similarities Do you think they should why or why not

  Effect of expansionary fiscal policy

Describe what effect an expansionary fiscal policy would've on the price level and real GDP starting from full employment equilibrium.

  Analyze possible employment effects of second alternative

The Occupational Safety and Health Administration (OSHA) promulgates safety and health standards. These standards typically apply to machinery (capital), which is required to be equipped with guards, shields, and the like.

  How much will this change inflation

What was the nominal interest rate last period (before the cuts) if the real rate was equal to the marginal product of capital?What happens to the real rate of interest this period (after the cuts) if the Federal Reserve does nothing to change the n..

  As a trader of a commercial bank explain how would

As a trader of a commercial bank explain how would I invest $1 million and earn risk free return by engaging in covered interest arbitage.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd