Question
Perpetual plastic plant makers cost $200 each. The number of plants that your firm expects to produce each year for each level of capital stock
Perpetual plastic plant makers cost $200 each. The number of plants that your firm expects to produce each year for each level of capital stock is as follows:
Machines: 0 1 2 3 4 5
Plant Production: 0 250 400 500 565 600
The plants sell for $1 each and your firm faces no other costs. The real interest rate is 10% and the depreciation rate of capital is 15%. There is a 20% tax on your firm's revenues from selling these plants. Use these numbers to answer the following 4 questions: 1. What is the firm's tax-adjusted user cost of capital? 2. What is the marginal product of capital for the fourth machine? 3. How many machines should the firm buy? 4. What is the profit after deducting taxes, interest, and depreciation?
In a small open economy
Sd = $20 billion + ($100 billion)?r
Id = $30 billion - ($100 billion)?r
Y = $70 billion
G = $20 billion
r w = 0.04
5. Calculate the current account balance.
6. Calculate net exports.
7. Calculate desired consumption.
8. Calculate absorption.
A country has the per-worker production function yt = 5kt 0.5, where yt is output per worker and kt is the capital-labour ratio. The depreciation rate is 0.2 and the population growth rate is 0.05. The saving function is St = 0.2yt, where St is total national saving and Yt is total output.
9. What is the steady-state value of the capital-labour ratio?
10. What is the steady-state value of output per worker?
11. What is the steady-state value of consumption per worker??
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