Describe one side of the equation as a marginal benefit

Reference no: EM131478890

Question: 1. Recall the formula from the application "The Effect of FDI on Rentals and Wages in Singapore." Give an intuitive explanation for this formula for the rental rate. Hint: Describe one side of the equation as a marginal benefit and the other as a marginal cost.

2. In Table, we show the growth in the real rental and real wages in Singapore, along with the implied productivity growth. One way to calculate the productivity growth is to take the average of the growth in the real rental and real wage. The idea is that firms can afford to pay more to labor and capital if there is productivity growth, so in that case real factor prices should be growing. But if there is no productivity growth, then the average of the growth in the real rental and real wage should be close to zero.

To calculate the average of the growth in the real factor prices, we use the shares of GDP going to capital and labor. Specifically, we multiply the growth in the real rental by the capital share of GDP and add the growth in the real wage multiplied by the labor share of GDP. Then answer the following:

a. For a capital-rich country like Singapore, the share of capital in GDP is about one-half and the share of labor is also one-half. Using these shares, calculate the average of the growth in the real rental and real wage shown in each row of Table. How do your answers compare with the productivity growth shown in the last column of Table?

b. For an industrialized country like the United States, the share of capital in GDP is about one-third and the share of labor in GDP is about two-thirds. Using these shares, calculate the average of the growth in the real rental and real wage shown in each row of Table. How do your answers now compare with the productivity growth shown in the last column?

831_5.2.png

Reference no: EM131478890

Questions Cloud

Common type of membrane protein : What are the key structural features of three common type of membrane protein; Phospholipids, Glycolipids and Cholesterol.

Which selects the sources to agree with its own views : Media bias comes from the audience, which selects sources to agree with its own views. If Internet kills newspapers, it will kill its own information source.

Presentation of the information : You have just finished watching "A is for Atom" a film about nuclear energy made in 1953. Based on the presentation of the information,

Compare and contrast the dyb and gyb strategies : Compare and contrast the DYB and GYB strategies in terms of the ability to sustain a business in the marketplace over the long term.

Describe one side of the equation as a marginal benefit : Recall the formula from the application "The Effect of FDI on Rentals and Wages in Singapore." Give an intuitive explanation for this formula for the rental.

Which of motivational practice are emphasized by whole foods : Assignment: Whole Foods Case Study Questions- Which of the motivational practices are emphasized by Whole Foods in its management system?

Describe the hippa security requirement : Describe the security issues of BCBST in regard to confidentiality, integrity, availability, and privacy based on the information provided in the BCBST case.

Analyze the collection of data by patient access personnel : Analyze the collection of data by patient access personnel and its importance to the billing and collection process.

Describe ways the team overcame barriers to creativity : Describe ways the team overcame barriers to creativity to identify solutions. Summarize the methods the team used to develop creative solutions.

User Account

All Pages