A. Suppose that Labor Supply is given by N=120 + 3w, and that MPN is given by MPN =860 - 3N. What is the equilibrium w and N? Calculate; show work.

B. Suppose MPKf=1500-10Kf, pk=1000, d=0.15 (15%) and r=0.05 (5%). The existing/current level of capital (Kt) is equal to 120. Calculate user costs, the optimal level of capital (Kf*), and the desired level of investment (I).

C. Suppose that Y=3000, C=2500-250r+0.5(Y-T), G=750, T=500, and I=1000-250r. Use these values/equations to calculate disposable income, government budget, and the equilibrium level of r. Show all work. (note that C also depends on Taxes, since it has 0.5*(Y-T) in the equation).

[hint: for question c: once you solve for r*, do not multiply by 100%. Use the value you obtain directly to solve for equilibrium I*, S*, etc.]