1. Consider the Romer model. If the percentage of the population engaged in ideas formation,, Increases, what are the short- and long-term impacts of this shift?
2. Draw a graph and explain the transition dynamics in the Solow model if. Why this model is useful?
3. Write down the firm's profit maximizing problem. Be sure to identify the variables the firm can choose and which it takes as given. What should the firm facing the following scenarios do? - The marginal product of capital is greater than the rental price of capital. -The marginal product of labor is less than the wage.