When capital increases by ΔK units and labor increases by ΔL units, and there is no TFP growth, output (ΔY) increases by: a. ΔK + ΔL units. b. MPL + MPK units. c. (MPK × ΔK) + (MPL × ΔL) units. d. (MPL × ΔK) + (MPK × ΔK) units.
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- Suppose that the production function of a company is given by q = qL^2 · qC and that the amount of labour qL and the amount of capital qC are functions of time t. At time t = 2, we know that qL = 9 andqC =8 and that the growth rateof qL is equal to 2 and the growth rate of qC is equal to 8. Find the growth rate of the production q at that moment.Write the production function in its simplest form (human capital being included in TFP) and explain the nature of each factor as well the theoretical value of the parameter Alpha. In other words what does the value of Alpha represent regarding the returns of each factors of production?Draw the solow model an fully label it. Suppose the savings rate DECREASES. Show the effect on the graph and stead state. what is the effect for long run living standards? I NEED A DRAWN OUT IMAGE PLASE I AM A VISUAL LEARNER.
- 16 True or False? The key difference between the Solow and production/expenditure models of the economy is that the Solow model endogenizes the saving rate.Labour-saving technical progress meansa) that marginal productivity of capital increases.b) that marginal productivity of labour increases.c) that marginal productivity of both inputs increases.d) None of the above is correct.The relation between technology and the quantity of factor inputs to Real GDP is specified by the production function. O True O False Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
- Assume that total output is determined by this formula: number of workers × productivity = total output Hint: Assume there are 100 workers and each worker produces $100 of output. If productivity increases by 3 percent and the number of workers increases by 2 percent a year, how fast will output grow?Q)If the economy is in a steady state, then A. both consumption per worker and capital per worker are decreasing. B. both consumption per worker and capital per worker are constant. C. consumption per worker is decreasing but capital per worker is constant. D. consumption per worker is constant but capital per worker is decreasing.(50 points) Consider the two-period economy with investment discussed in class. Forthe sake of simplicity, assume that the utility is time separable and that the per-periodutility is equal to:u(C) = log CAssume also that the technology to produce the consumption goods has constant returns to scale. Moreover, capital is the only input to production. Hence the currentperiod technology can be represented as:Y = zK1where Y , K, and z stand for output, capital and total factor productivity in the currentperiod. The future period technology is akin to the current period technology. There isno government expenditure in the current and future period so that G = 0 and G0 = 0.Finally there is full capital depreciation, namely δ = 1.(a) (10 points) Write down the social planner’s problem. State the variables withrespect to which the social planner maximises.(b) (10 points) Derive the first order conditions to the planner problem. Rearrangethere condition to find the conditions characterising the…
- A CES production function with physical and human capital Consider the CES production function in terms of physical capital, K, and human capital, H: where 0 a. Set up the Hamiltonian and find the first-order conditions. b. What is the optimal relation between K and H? Substitute this relation into the given production function to get a relation between Y and K. What does this “reduced-form” production function look like? c. What is the steady-state value of the ratio of physical to human capital, (K/H)∗? d. Describe the behavior of the economy over time if the initial condition is such that K(0)/H(0)? e. Suppose that the inequality restrictions IK ≥ 0 and IH ≥ 0 apply. How do these constraints affect the dynamics if the economy begins with K(0)/H(0)∗?Assume the production function takes the general form: Y=Z*F (K,L,A)where all marginal products are positive.Which 3 of the following statements are correct?a. If A is fixed, then population growth acts as a drag on growth of output per person.b. If A is fixed, then population growth acts as a drag on growth, and so Malthus was correct that populationgrowth will always reverse the impact of technological improvements.c. Both rises in z and rises in K/L (capital intensity) will boost output per worker.d. Growth in output per worker can occur due to rises in z (technology) or rises in K/L (capital intensity), orboth.Question 2 Its production function is 2 times the square root of k (the same as 2k1/2) and its depreciation rate is 3 percent. Its population grows at a rate of 4 percent per year, and technology is advancing at a rate of 1 percent annually. Its residents consume 90% of each additional dollar of income. Find the economy's steady state level of capital (k*), carefully following all numeric instructions.