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An economy has a Cobb–Douglas production function: Y = Kα(LE) 1−α. The economy has a capital share of a third, a saving rate of 24 percent, a depreciation rate of 3 percent, a rate of population growth of 2 percent, and a rate of labor-augmenting technological change of 1 percent. It is in steady state. a) At what rates do total output, output per worker, and output per effective worker grow? b) Solve for capital per effective worker, output per effective worker, and the marginal product of capital. c) Does the economy have more or less capital than at the Golden Rule steady state? How do you know? To achieve the Golden Rule steady state, does the saving rate need to increase or decrease? d) Suppose the change in the saving rate you described in part (c) occurs. During the transition to the Golden Rule steady state, will the growth rate of output per worker be higher or lower than the rate you derived in part (a)? After the economy reaches its new steady state, will the growth rate of output per worker be higher or lower than the rate you derived in part (a)? Explain your answers.
Par Inc., is a small manufacturer of golf equipment and supplies. Par's distributor believes a market exists for both a medium-priced golf bag, referred to as a standard model, and a high-priced golf bag, referred to as a deluxe model. What profit co..
Many industrialized countries such as the United States attempt to seriously restrict immigration of production workers, but are more open to immigrants who are highly-skilled. Why might this be the case? Why is this a problem for developing countrie..
Suppose you work as research economist at the EPA. There are two firms that operate in a perfectly competitive marker. This implies that each has the same marginal benefit curve, which in this case is horizontal at MB= $100. Now calculate that social..
Suppose that the demand in a particular industry is given by Qd = 500 − 2P. When the market price in the industry is $50 per unit, total demand in the industry is _________. Furthermore, assume that the entire market consists of four firms that share..
Provide a succinct statement regarding the value of the article. III. What new ideas or amplification of existing ideas emerged as a result of reading the article?
What is the equilibrium income level and rate of interest? Suppose there is an increase in t from .15 to .20 . What will be the change in the equilibrium level of income and interest rate? Suppose there is a decrease in government expenditures (G) fr..
For what type of goods does law of one price hold quite well. Since PPP rarely holds at any point in time, is re any substantive meaning to terms overvalued or undervalued currency.
Sort the list below according to whether or not an item is an assumption made under perfect competition (aka pure competition or competitive industry). Assumed in perfect competition. Not assumed in perfect competition.
illustrate what can you say about cost elasticity of demand for DVD players. Will cost reduction necessarily lead to an increase in profits for DVD player manufactures.
Illustrate what will be the price of this new drink in the long run, assuming the industry is a Cournot duopoly.
Suppose that Rob and Big both raise animals and sell them. Because Rob and Big have different talents, they have varying abilities to raise these animals. In 1 day, Rob can produce either 10 cows or 20 pigs.
The relationship between the government's budget deficit and its spending is:
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