Eco4, solve in details

Consider an economy where production uses labor (N), physical capital K and human capital H. Total output is given by Y = =K"/ N1-@-8. In this economy a fraction s of total output is saved each period and invested in physical capital, while a fraction s, is saved to be invested in human capital. The output that remains after investment is consumed. Population grows at a constant rate a so that N = (1+ n) N. The current stock of physical and human capital depreciates at a constant rate o every period. The capital accumulation equations are: K =(1 -5 ) K + SKY H = (1 -6) H + SAY 1. Find the output per-worker. 2. Find the steady state value of kas, has; yes. You should get to the following expressions: 1-a-A 1-0- 1-a -8 k.= = nto nto (n + 6) 3. Compare the effect of an increase in the capital saving rate on output in this model and in the model without human capital. For which model is the effect greater? Explain why introducing human capital changes the effect of savings in the way it does. We measure the effect with the elasticity of steady state output to 8%. Remember that in the model without human capital we have: yas = 2 ( 28%CONCEPT PROBLEMS 1. Explain how through trade a country can consume at levels beyond the reach of its production possibilities. 2. Why do countries place restrictions on international trade? 3. What is the difference between a tariff and a quota? 4. The Case in Point on America's shifting comparative advantage suggests that the United States may have a comparative advantage over other countries in the production of high-tech capital goods. What do you think might be the sources of this advantage? 5. "I know a lawyer who can type 100 words per minute but pays a secretary $10 per hour to type court briefs. But the secretary can only type 50 words per minute. I have told my lawyer friend a hundred times she would be better off doing the typing herself, but she just will not listen." Who has the better part of this disagreement, the lawyer or the friend? Explain. 6. Which individuals in the United States might benefit from a tariff placed on the importation of shoes? Who might lose? 7. Explain why economists argue that protectionist policies lead to the misallocation of resources in the domestic economy. 8. Tomatoes grow well in Kansas. Why do the people of Kansas buy most of their tomatoes from Florida, Mexico, and California? 9. Under what circumstances will a country both export and import the products of the same industry? 10. Suppose the United States imposes a quota on copper imports. Who might be helped? Who might be hurt? 11. Some people argue that international trade is fine, but that firms in different countries should play on a "level playing field." They argue that if a good can be produced more cheaply abroad than at home,The table shows the marginal benefit to a paper mill of polluting a river and the marginal cost to residents who live downstream. In this problem assume that the marginal benefits and marginal costs are measured at (not between) the specific quantities shown. Plot the marginal benefit and marginal cost curves. What is the efficient quantity of pollution? Explain why neither one ton nor five tons is an efficient quantity of pollution. In the absence of pollution fees or taxes, how many units of pollution do you expect the paper mill will choose to produce? Why? Quantity of pollution (tons per week) Marginal benefit | Marginal cost 0 $110 $0 100 8 2 90 20 UJ 80 35CONCEPT PROBLEMS 1. There is a gap between what workers receive and the value of what workers produce in a market capitalist system. Why? Does this constitute exploitation? Does it create the kinds of crises Mark anticipated? Why or why not? 2. What is meant by the labor theory of value? What are the shortoomings of the theory? 3. What would you sayI is the theory ofvalue offered in this book? How does it differ from the labor theory of value? 4. In what ways does reliance on the labor theory of value create a problem for the allocation of natural resources? 5. What do you think would be the advantages of labor-managed rms of the kind that operated in the former 'fugoslavia? The disadvantages? 5. Suppose you were the manager of a Soviet enterprise under the old command system. \"fou have been given a quota and the promise of a big bonus if your rm meets it. How might your production choices differ from those of the management of a prot-maximizing firm in a market capitalist economy? 1 What are some government-operated enterprises in the United States? Do you see any parallels between the problems command economies faced with the production of goods and services and problems in the United States with state-run enterprises? S. A Chinese rm operating as a state-owned enterprise had an incentive to produce the efficient level of output, even though Attributed to Ubby Hittenberg and TImothyTI-egarthen Saylor_ol The table in Panel [a] shows a measure of the inflation rate, the percentage change in the average level of prices below. Panels [b] and [c] provide blank grids. We have already labeled the axes on the grids in Panels {b} and [c]. It is up to you to plot the data in Panel [a] on the grids in Panels {b} and {:2}. Connect the points you have marked in the grid using straight lines between the points. What relationship do you observe? Has the ination rate generally increased or decreased? What can you say about the trend of ination over the course of the 19905? Do you tend to get a different "interpretation\" depending on whether you use Panel (b) or Panel {:2} to guide you? Figure 1.23 magma 'l'ur MM III-\"brim lJ-l