Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Questions on microecconomics, provide solutions for the same Steel manufacturing in the US requires only one input: labor. Steel is produced by a representative rm

Questions on microecconomics, provide solutions for the same

image text in transcribedimage text in transcribedimage text in transcribed
Steel manufacturing in the US requires only one input: labor. Steel is produced by a representative rm under perfect competition according to the production function 1 L = L St ) 2 Throughout this problem assume that the wage in the United States is 1. {1} {4 minuta) Suppose that United States can freely import and expert steel. Foreign supply of steel is supplied with perfect elasticity at a price of 1. How much steel is produced in the US\"? Car manufacturers use steel and labor to make cars. Both steel and labor are variable inputs and cars are produced by a. representative firm under perfect competition according to the production function F[L,S) = \"3+ vi?) {2) {1D minutes} Now suppose the price of steel is p3. Solve for the supply function of US car manufacturers [quantity supplied as a function of the price of cars, is... and the price of steel a)- {3} {3 minutes} Assume the US freely trades steel, where the world price of steel is 1 as before. 1What is the supply curve for cars? {4] {3 minutes] Suppose that the supply of cars from foreign producers is perfectly elastic at p = lll {the world price of cars is Hill}7 and the US demand for cars is Q = lS lP. {a} {4 minutes] Supposing that there is free trade in the car market as well as the steel market, calculate the equilibrium price and quantity of cars consumed {purchased} in the United States. Does the US imp-ort- orerport cars andhow many ow the US import or export? \f3. Bergson becomes a benevolent dictator. He has a subjects i = 1,... .n with CARA utilities w1...., un, respectively. (Write o, for the absolute risk aversion of i.) The total wealth in the society, Y, is a function of an unknown state w and is normally distributed with mean / and variance of. Bergson can choose any allocation r = (21, ... .2,) such that an (@) + ... +2, (w) I from her savings so that her wealth at t + 1 is my+1 = " (wt - 2,) if her wealth at t is wy and she consumes r, at t. (b) Find a sophisticated-optimal consumption strategy for her in which the self at any given date s consumes yes. Compute the constant y and briefly verify that this is indeed a subgame-perfect equilibrium of the multi-agent game. (c) For 8

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Economics Theory and Policy

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

9th Edition

978-0132146654, 0132146657, 9780273754091, 978-0273754206

More Books

Students also viewed these Economics questions

Question

=+b. The federal government increases spending on national defense.

Answered: 1 week ago