Question
1. A firm's production technology is Y = A * K^0.25 * L^0.75, where the technology level A=8. For such a production function the marginal
1. A firm's production technology is Y = A * K^0.25 * L^0.75, where the technology level A=8. For such a production function the marginal product of capital is MPK = 0.25 * 8 * K^-0.75 / L^0.75
The firm is stuck with K=81 but is flexible on workers. If the price of the firm's output is P=20 and the cost of a unit of capital is R=8.33, how many workers should the firm have?
Round your answer to the whole worker.
2. In an economy, the total output of all the firms is described by Y = 8 * K^0.25 * L^0.75. For it,
The price level is P=20 and the cost of a unit of capital is R=6. There are L=10 workers in the economy.
The payments for capital, or the capital bill, amount to RK=752 in the economy.
Find the payments for wage, or wage bill, WL, in the economy.
3. In a economy, consumption is 40, public sector spending is 22, investment is 15, net exports are -3. The treasury is running a $6 budget deficit. Which fraction of their disposable income are households saving?
Enter your answer in decimals, not percents.
3a .What was the private saving equal to?
3b. How much of the savings was spend to finance the public sector?
3c. What was the external saving, that is, how much did the people's claims on foreign assets grow?
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