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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.
Consider an antique auction where bidders have independent private values. There are two bidders, each of whom perceives that valuations are uniformly distributed between $100 and $1,000. One of the bidders is Sue, who knows her own valuation is $200..
q.as manager of city racquet club you must determine the best price to charge for locker rentals. suppose the marginal
Suppose the actual RGDP for the US economy in Y2003 and in Y2004 are respectively $10,580.7 billion and $10, 994.3 billion. Estimate the growth rate of RGDP in percentage terms between these two years. (Hint Growth rate = (Yt- Yt-1)/Yt-1 *100).
Assume that the resource and output markets are both competitive, and that it is possible to hire fractional units of the resource. Explain how many units of the resource will a profit-maximizing firm hire.
What percentage of the total variation in the number of calls is explained by the regression model.
A consumer buys only two goods, X & Y. a) If the MRS between X and Y is 2 and the marginal utility of X is 20, what is the marginal utility of Y?
When the competition is intense and the environment is changing rapidly, it is especially important to
Show how the lottery winning affect your budget line. After winning the lottery you continue to work the same amount of hours every day. What is the income effect of the lottery gain? Now your employer increases your hourly wage. Using the income eff..
Why did most communities in the early days of e-commerce fail? What factors enable some online social networks to prosper today?
One key assumption lying behind the policy irrelevance proposition is that
The average fixed cost curve always has a negative slope because
A mechanical engineer must recommend an A/C system to a commercial building owner. The owner uses and MARR of 6%, but is not sure how long he will own the building. A conventional split system has a design life of 10 years, a cost of $47,000, and ann..
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