Macroeconomics
4th Edition
ISBN: 9780393602487
Author: Jones, Charles I.
Publisher: W. W. Norton & Company
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Chapter 6, Problem 4RQ
To determine
Explain the concept of non-rivalry based on the key production function of Romer.
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- The Black Death: (a) Wages were higher after the Black Death because of diminishing returns. Our production model exhibits diminishing returns to labor: each additional unit of labor increases output by less and less. So if the amount of labor is reduced, the marginal product of labor — and hence the wage — increases. The reason is that capital stays the same: each remaining worker is able to work with more machines, so his productivity rises. In fourteenth-century Europe, the marginal workers could move to better land and discard old broken-down tools. Graphically, this can be seen by considering the supply-and-demand diagram for labor in Figure 4.2(b). If the supply of labor shifts back (because a large number of workers die), the equilibrium wage rate increases. Draw this graph — including the shift in the labor supply curve — to see the result for yourself. Mathematically, the result can be seen in the solution for the wage rate in our production model,…arrow_forwardList and discuss the two (2) main factors of economic growth according to the production possibility frontier model.arrow_forwardProblem 1 Consider the simple (one-period) production model. The production function is Cobb-Douglas, exhibits constant returns to scale, and the exponent on capital equals 0.25.arrow_forward
- A key assumption in an endogenous growth model with both labour and capital inputs in the production function is that Multiple Choice O о о о O the share of capital is larger than the share of labour the share of capital and labour have to be equal better technology is a byproduct of more capital investment there are no external returns to capital long-run growth comes solely from technological progressarrow_forwardSuppose the per-worker production function is glven as follow. y= 6kh2/a, where k- (physical) capital per worker, h human capital per worker The economy is initially endowed with 280 units of (physical capital per worker and 250 units of human capital per worker. In the neighbourhood of the initial endowments of both physical and human capital, what will be the change in per-worker output when there is a small incremental change in human capital while holding all else constant lie, what is the marginal product of human capital)? Note: Keep your answer to 2 decimal places if needed. For example, if your answer is 1234.56. then enter 1234.56 in the answer box.arrow_forwardConsider now the two-period model in general equilibrium, so that prices, investment, and labor supply are endogenous, i.e. the production economy. Analyze and carefully explain graphically and in words the general equilibrium effects of a decrease in TFP for a benchmark economy with no frictions.arrow_forward
- 1. Over a period of 10,000 years, the population of Brobdingnag is estimated to have increased from 4 million to 170 million. Assuming that the level of income per worker was constant, there are only two factors of production, Land (X) and Labour (L), and the exponent on land in the production function is one-third, what was the annual growth rate of productivity, A? a) 0.17% b) 0.42% c) 0.03% d) 0.01%arrow_forwardWhat is the effect of an increase in total factor productivity on steady state population and consumption per worker in the Malthusian model?arrow_forwardShow graphically on the same x and y axis what happens to this production function if there is a technological advancement in this economy. Don,t copy from anywhere.arrow_forward
- Specific Factors Model: Consider an economy with two goods – corn (C) and potatoes (P) – both produced using labor. The technologies for the two sectors are given by the following Cobb-Douglas production functions: 1-a Qc= Ac K“ Lc Qp = Ap T Lp'B Where 0arrow_forwardExplain in detail the difference between endogenous variables and Exogenous variables. Use an example for each from the Solow modearrow_forwardIn a Heckscher-Ohlin model, if capital-owners are relatively better off, then it is consistent with the labour- capital amount (L/K) demanded becoming for the capital-intensive good. Paragraph v B I U ...arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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