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- Consider an economy with an endowment of L = 60 units of labor. The production functions are X = 4Lx and Y = 1.5Ly, where X and Y are consumption goods and Lx and Ly indicate how labor is allocated. If the total labor endowment is equally divided towards producing goods X and Y, then the resulting out is (X, Y) =Consider an economy that has a labor endowment of L = 40 units. The production functions are x = 0.5Lx and y = 4Ly, where x and y are consumption goods while Lx and Ly represent the labor allocation. What is the equation for the PPF?Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: i. Draw the economy’s production possibility frontier on hindsight of the relevantassumption.
- Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , drawthe economy's production possibility frontier on hindsight of the relevant assumption and why the points outside the frontier unattainable?.Consider an economy with 100 units of labor and capital that must be completely distributed to Firms X and Y. With this information, recommend an efficient allocation of the two inputs between the two firms. Discuss and show the necessary solution to support your recommendationX = KL2 – L3;Y = 10K1.5L0.5;Graphically illustrate and discuss how an economy can achieve production efficiency if at its current allocation on L and K, the MRTSLKY > MRTSLKZ (you may use your own values to represent the available L and K and the initial distribution)Explain with the help of Graphs of Total Product (TP) and Marginal product (MP) the three laws of variable proportions and their significance in Industry and agriculture. Give the relationship between TP and MP at different stages of variable proportions. What is the relationship between Average Product curve (AP) and marginal product curve (MP) and explain at what point a progressive firm should change its labor or capital inputs with more skilled labor or with new technological machine in order to remain comparative in the market. What would happen to its product in the market if it does not change its machines or if it changes all its machines at the same time
- Assume an economy producing only two goods (shoes and computers) with a fixed amount ofproductive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions:i. Draw the economy’s production possibility frontier on hindsight of the relevantassumption.ii. Why are points outside the frontier unattainable? iii. Identify three ways by which the economy can attain the level of production outside thePPF. iv. What happens to the PPF when technological change overwhelmingly favours theproduction of computers? v. What happens to the PPF when the economy discovers an improved technology forproducing shoes? vi. Assume now that the sacrifice ratio is greater than 1, show what will happen to the…Consider a production function for an economy with 2 factors of production L, K: Y=10(KL)1/2 where Y is real output, L is labour, K is capital. In this economy the factors of production are in fixed supply with L = 10, K = 10. What type of returns to scale does this production function exhibit. Demonstrate by example. If the economy is competitive what is the total income that will go to the owners of capital?Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the law of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the foregoing assumptions, answer the following questions: i. Draw the economy’s production possibility frontier on hindsight of the relevant assumption. What happens to the PPF when technological change overwhelmingly favours the production of computers? What happens to the PPF when the economy discovers an improved technology for producing shoes? Assume now that the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier. vii. Mention three (3) conditions under which the sacrifice ratio between the goods will be…
- Step3, part b of the question: it asks for equilibrium level of C. If formula for C is C= 1000+ 0.8Yd, then since at equilibrium Y=7000 shouldn't C be equal to C= 1000 + 0.8(7000-350) = 6320? If so, than the last part of the question regarding S should be 7000-6320= 680 Please let me know where I am wrongAssume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , ( i )economy's production possibility frontier on hindsight of the relevant assumption ( ii ) why the points outside the frontier unattainable? ( III ) identify three ways by which the economy can attain the level of production outside the production possibility frontier. ( iv ) what happens to the production possibility frontier when the economy discovers an improved technology for shoes ( v ) what happens to the production possibility frontier when technological change overwhelmingly favors the production of computers. ( vi ) assume now the sacrifice…Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , ( i )economy's production possibility frontier on hindsight of the relevant assumption ( ii ) why the points outside the frontier unattainable? ( iv ) what happens to the production possibility frontier when the economy discovers an improved technology for shoes ( v ) what happens to the production possibility frontier when technological change overwhelmingly favors the production of computers. ( vi ) assume now the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier. (vii) mention two conditions…