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In the United States, the capital share of GDP is 30%, output growth is 3%, the depreciation rate is 4% and the capital output ratio (K/Y) is 2.5.Assume the US economy is described by a Cobb-Douglas production function.
(a) In terms of s,n,g, and ? (though not necessarily all) what is the growth rate of output for this economy if it is described by the Solow model.
(b) Using the steady state condition, calculate output growth for this economy is the savings rate is 17.5%.
(c) What is the steady state value of the marginal product of capital?
(d) Is the economy at the golden rule steady state?
If the firm can not produce in total more than 14 units, then what would be the maximum profit and the optimal values of Q1 and Q2? Find an answer using the Lagrange multiplier. Find a value of the Lagrange multiplier. What economic interpretation..
suppose that the interest rate on a one year bond is 7 percent today and the interest rates expected on one year bonds in the future are 6 percents in one year, 5 percent in 2-year , and 4 percent in three years bond. what are interest rate today ..
There are two firms that engage with a Cournot competition with the inverse demand curve given by P=1000-5Q. Suppose the two firms have constant marginal costs $5 and $10. a). Write down the profit function for each firmb). Firm 2 produces 10 units, ..
Suppose the LRAS is positioned at a real GDP of $12 trillion in base year dollars, and the long run equilibrium price level (in index number form) is 115. The corresponding full employment level of nominal GDP must be how much trillion dollars.
Statements Firm will finance a proposed investment by issuing new securities while maintaining its optimal capital structure of 60% debt and 40% equity. The firm can issue bonds at price of $950.00 before $15 flotation costs.
According to the chief engineer at the Zodiac Company, Q = ALf Kf , where Q is the output rate, L is the rate of labor input, and K is the rate of capital input. Statistical analysis indicates that f = 0.8 and f = 0.3. The firm's owner claims the ..
The Federal Reserve has just purchased $100 million in Treasury bills from commercial banks. b. If the public holds a fixed amount of currency (so that all loans create an equal amount of deposits in the banking system), the minimum reserve ratio ..
The widget Industry in Anytown is a monopoly, controlled by Widget Corp. Its demand curve for the local market is given by P = 800 - 20 W Where W represents the number of widgets sold per period. The total cost function (including opportunity or impl..
ABC Corporation's recently issued bonds paying interest semiannually and maturing in 10 years. The face value of each bond is $1000, and 6.8% is the nominal interest rate. (a) What is the effective interest rate an investor receives.
When the government imposes a price floor = $20, disequilibrium between quantity demanded and quantity supplied results in. Consider a market where demand is D: P = 30 - Q and supply is S: P = 0.5Q. 1. Equilibrium quantity Qe is
Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's average total cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is $4.
Mike salary will stay at $60,000 per year until he retires. He currently has $82,345 in his retirement fund, which earns 7% annually. He is now 43, and he expects to live until he is 81(he found a website that predicted his life span based on his c..
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