PRODUCTION FUNCTION - Assume an economy has the following production function: Y=F(K,L)=K0.4L0.6
a. State the per-worker production function.
b. If the savings rate is 0.2 and the depreciation rate is 0.05, calculate the steady-state capital stock per worker, output per worker, and consumption per worker.
c. Now suppose the government increases spending, reducing the country's savings rat...
International Trade - I need to make sure my answers and reasoning is correct.
The attached graph shows the calculator market for Venezuela, assumed to be a "small" country that is unable to affect the world price. (S)Venezuela is the domestic supply schedule and (D)Venezuela is the domestic demand schedule.
1. Consider the attached graph. Suppose the rest of the world supplies calculators...
price elasticity - Prise rises from $10 to $15, and the quantity demanded falls from 100 units to 60 units. What is the coefficient of the price elasticity of demand between the two prices?
A) 1.25
B) 0.80
C) 0.60
D) 1.00
Steady-state interest rates - Now we will solve for the steady state in a calibration of the US economy in 2000. In
this problem, you will assume that the rate of growth of the work force is n = 0.017 and
there is no exogenous technological progress. The aggregate production function for the
US economy in 2000 is Y = (11.5)K 1/3 L 2/3 . The units are billions of 1996 dollars. A
plausible value...
Economics calculation - Revenue, surplus and losses - Given the following information pertaining to a small country A with respect to good X under free trade and with a tariff in place
Price of X under free trade $12
Ad Valorem tariff 10%
Production of X under free trade 2,000 units
Production of X with tariff in place 2,300 units
Import of X under free trade 600 units
Import of X with tar...
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