PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 7, Problem 7.4CC
To determine
Determine the changes in the average labor productivity after the technological advance.
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0.5 0.5
Given a production function: Y = AK N If output grows at 5%, capital grows at 2% and the number of
workers grows at 4%, then technology (or total factor productivity) grows at % ? (Answer in integer only,
no decimal place.) Your Answer: Answer
Given a production function: Y = AK0.5 N0.5. If output grows at 5%,
capital grows at 2% and the number of workers grows at 4%, then technology (or
total factor productivity) grows at %?
(Answer in integer only, no decimal place.)
Your Answer:
Answer
Suppose the production function for widgets is given byq = kl - 0.8k2 - 0.2l2where q represents the annual quantity of widgets produced, k represents annual capital input, and l represents annual labor input.a. Suppose k = 10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many widgets are produced at that point?b. Again assuming that k = 10, graph the MPl curve. At what level of labor input does MPl = 0?c. Suppose capital inputs were increased to k = 20. How would your answers to parts (a) and (b) change?d. Does the widget production function exhibit constant, increasing, or decreasing returns to scale?
[The following scenario applies to the next two questions.]
An economy has a Cobb-Douglas production function: Y = AK L(1-a).
A is the technology level, K is capital; L is labor; and Y is income.
● In 20X1, the technology level A is 139, capital K = 245, labor L = 458, income Y = 8,155
In 20X2, the technology level A is 144.96, capital K = 259.26, labor L = 474.12, income Y = 8,945.71
In 20X3, the technology level A is 152.02, capital K = 273.31, labor L = 489.20
Question 1.6: Elasticity of income with respect to labor
What is the elasticity of income with respect to labor?
A. 18%
B. 20%
C. 22%
D. 24%
E. 26%
Question 1.7: Income
What is income in 20X3?
A. 9,240.34
B. 9,535.25
C. 9,830.15
D. 10,125.06
E. 10,419.96
Chapter 7 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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