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Consider the Solow growth model with Cobb-Douglas production function Y = z[KαL1-α], where Y is total output, z is total productivity, K is the total capital input, and L is the total labor input.
a. Show that in the competitive equilibrium, α is the fraction of national income that goes to the remuneration of capital and 1 - α is the fraction that goes to the remuneration of labor.
b. Use the (average) labor share in national income from your own country for the period 1990 to 2000 to find the value of α.
c. Use your answer to part b to calculate the ‘‘Solow residual'' z using the aggregate output, capital, and labor (Y, K, and L) from your country for each year in the period 1990 to 2000. How has this measure of total productivity evolved over time in your country? Is there a productivity slowdown? Explain the possible reasons of this evolution (inventions, government regulations, price of energy, etc.).
What happens to those factor prices when the price of cloth rises? Who gains and who loses from this change in the price of cloth? Why? Do those changes conform to the changes described for the case with factor substitution?
Currently, a typical fan pays an average ticket price of $5. The price elasticity of demand for tickets is -0.6. Management is thinking of raising the average ticket price to $5.50. Compute the predicted percentage change in tickets sold. Would yo..
The manager of a cheese-packing plant can use either people (labor) or cheese knivess (capital) to prepare packages of gouda. Based on estimates provided by an efficiency expert, the firm's production function for gouda is given by Q = 2K + L (MPK..
Major overhaul express of $5000 each are anticipated for a large piece of earthmoving equipment. The expenses will occur at EOY four and will continue every 3 years thereafter up to and including year 13. The interest rate is 12% per year.
Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each..
Calculate and interpret the volume and price variances on the revenue side.
A Taiwan electronics corporation exports personal computers to the United States Their PC sales over the past five years are following:
Assume that the officials in Ecoland have compiled the followinginformation about their economy for last year. The government uses the following equation for the investment function
If she expects to live for seven more years after retiring, and wants her consumption to remain the same (in real terms) every year from now on, how much can she consume this year?
We can either look at a tax increasing the costs to the consumer or producer (depending on which party physically pays the tax), or we can look at it as a wedge between the (full) price the consumer pays and the (net) revenue the firm receives.
what is the probability that it will be green?I did take one marble out of the bag; it was red. I set it aside. Now I am going to choose another marble at random. What is the probability that it will be green?
Which Linux distro might be best for your Mom to use as a Windows replacement?
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