Find the equilibrium quantities and prices , Macroeconomics

Assignment Help:

Consider the following simple economy which consists of two industries, guns (1) and butter (2) and is characterized by the following input-output matrix.

2143_matrix 3.png

Suppose also that the input-output vector of labor inputs is a=[.2  .4]. Suppose consumers are expected to demand 10 units of guns and 20 units of butter. Also assume that the numeraire wage rate is w0=10.

a. Find the equilibrium quantities of guns and butter necessary to satisfy consumer demand.

b. Find the equilibrium prices to charge for each good.

c. Verify that the economy is in equilibrium.

d. How many workers are employed?

e. Show that profits are zero in all industries.

f. Are the Hawkins-Simon conditions satisfied? What would happen if they were not satisfied?

g. What would happen if the wage rate doubled?


Related Discussions:- Find the equilibrium quantities and prices

What is the meaning of deindustrialisation, What is the meaning of Deindust...

What is the meaning of Deindustrialisation Deindustrialisation or structural decline of many manufacturing industries along with activities like coal mining is associated with

Different of cost, discuss the different of cost?draw the cost curves

discuss the different of cost?draw the cost curves

What are the potential advantages of economic growth, What are the potentia...

What are the potential advantages of economic growth? The potential advantages of growth include • More goods and services are accessible to satisfy more want and requireme

Labor Economics, Assume Workers Comp awards $X to workers not working becau...

Assume Workers Comp awards $X to workers not working because of injury. $X is set to equal the workers previous wages. Once workers return to work, the award payments stop. Suppose

What do you mean by the long run outcome, Imagine a firm with the same cost...

Imagine a firm with the same cost structure but in each of the four market structures: Competitive, Monopolistically Competitive, Oligopoly, and a Monopoly. Using the concepts of c

GDP AND PRICE LEVEL IN SHORT RUN, #question.WHAT IS GDP AND DIFFERENT PRICE...

#question.WHAT IS GDP AND DIFFERENT PRICE LEVEL IN SHORT RUN?.

Money, how to calculate the ultimate change in deposits and credit?

how to calculate the ultimate change in deposits and credit?

Marginal abatement cost curve, A critically important criterion that must b...

A critically important criterion that must be considered in evaluating environmental policies is whether they provide strong incentives for people to find new ways to improve ambie

Engine performance in general are not adversely affected, Henry Ford's Mode...

Henry Ford's Model T was originally designed and built to be run on ethanol. Today, ethanol (190-proof alcohol) can be produced with domestic stills for about $0.75 per gallon. Whe

Calculate bright star equity fair value and wacc, After the fall of the kin...

After the fall of the king, a tax rate of 20% has been introduced in the Frog Islands Republic. The value of Sun corporation is now 100.000€. Bright Star Co. debt has no changed. T

Write Your Message!

Captcha
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