If output is $7500, the level of capital is 600, capital's share of total income is 0.6, and the price of output is $4, then what is the nominal rental rate given the neoclassical theory of distribution holds?
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- Assume a Cobb-Douglas production function which exhibits constant returns to scale. If a natural disaster destroys some of the capital stock, the neoclassical theory of distribution predicts that the real wage will and the real rental price of capital will_____ O a. increase; decrease O b. decrease; decrease O c. increase; increase O d. decrease; increaseJosephmigratedtoCanadafromGhana5yearsago.Hecurrently works in sales but is considering quitting work for two years to earn an MBA degree. His current job pays $40,000 per year (after taxes), but he could earn $55,000 per year (after taxes) if he had an MBA. Tuition is $10,000 per year, and the cost of an apartment near campus is equal to the $10,000 he is currently paying. His discount rate is 6 percent per year. He just turned 48 and plans to retire when he turns 60, whether or not he earns his MBA degree. Based on this information, should he go for an MBA degree? Explain carefully with appropriate calculations.Which of the following is/are consistent with the neoclassical theory of distribution? (i) Everything else being constant, higher employment of a factor comes only at the expense of a lower return. (ii) The more abundant a factor is, the lower is its return. (iii) The more abundant a factor has become, the higher is the return of the factor which has not increased. a. (i), (ii), and (iii) are all correct. O b. O C. O d. Only (i) is correct. Only (iii) is correct. Only (ii) is correct.
- (ii) What is the relation between Kt and Ht? Use this relation to write down total output as a function of Ktonly. Imagine that the number of people in this economy, Nt, is different from the number of workers because some people do not work. Lt Let lt - be the number of workers per capita (the fraction of the population that works). Let y Nt Yt be output per capita and Nt Kt kt be capital per capita. Finally, let n be the rate of population growth and y, be the growth rate of labor. Nt (iii) Using the "effective production function" you derived in (b), write down output per capita, yt, as a function of capital per capita, kt, labor per capita, lt, the level of population Nt, and the level of technology, A. Following Solow and Swan, assume there is no government and no net exports, that the depreciation rate of capital is the constant 8 > 0 and the savings rate is constant 0 < s < 1. (iv) DERIVE the fundamental equation of Solow-Swan. How does the growth rate of capital depend on…1. Account for what motivates rental firm’s investment decisions? 2. With the use of the neoclassical model of investment, elaborate on what would happen to the rental price of capital, the cost of capital, and investment if a hurricane destroys some portion of the capital stock.Hospitality Hotels forecasts monthly labor needs.(a) Given the following monthly labor fi gures, make a forecastfor June using a three-period moving average and a fi veperiod moving average. Month Actual ValuesJanuary 32February 41March 38April 39May 43 (b) What would be the forecast for June using the naïvemethod?(c) If the actual labor fi gure for June turns out to be 41, whatwould be the forecast for July using each of these models?(d) Compare the accuracy of these models using the meanabsolute deviation (MAD).(e) Compare the accuracy of these models using the meansquared error (MSE).
- ) Consider the following closed economy SImodel set upY = 18000C = 300 + 0.8(Y − 2500)I = 3500 − 400(r)G = 3000T = 2500(a) Compute the impact on r and I, if Gincreases by 500.(b) Compute the impact on r and I, if Gincreases by 500.(c) Compute the impact on r and I, if bothG and T increase by 500.answer the following questions using economic concepts: Explain the law of diminidhing returns whith a relevant exampleDefine the term cost-of-living index?
- There is a negative relationship between planned investment and the interest rate because... Select one: O a. none of the options O b. the interest rate affects the cost of investment projects O c. the risk affects the return on investment projects O d. the interest rate affects the income tax of investment projectsDRYERS 888888888 100 90 80 70 60 50 40 30 20 10 to D O a. The economy has insufficient resources to produce at a more desirable point. O b. The economy's available technology prevents it from producing at a more desirable point. O c. There is widespread unemployment in the economy. O d. The economy is experiencing economic growth. im 10 20 30 40 50 60 70 80 90 100 WASHERS Figure 2-3 Refer to Figure 2-3. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?• Any point below the PS characterizes inefficiency. Theory of Production... QUESTIONS (1) Given CD PF of • If A = 25, and a = /, Q = AK" L'-a Determine: AP = TP/L MP,= dTP/ƏL MPK = dTP/ƏK (2) Given a PF of the type 1-a Determine: Q = AK" + L" • AP = TP/L • MP,= dTP/ƏL MPK = dTP/ƏK %3D (3) If in (1) above, A = 100, a = 0.6, K = 25, and L= 100, determine MPL, MPK, AP, APK and TP. %3D Theory of Production.. (4) Suppose a production function is represented by Q = F(K,L) = 600K²L² - K3L3 • To construct MP, and AP, assume that K = 10 • The production function becomes q = 60,000l2 - 10ool3 Q = 60,000L? - 1000L3 The marginal productivity function is MPL = dTP/dL = 120,000L - 30ooL? which diminishes as L increases • This implies that Q has a maximum value: • 120,000L - 30ooL? = 0; 40L = L2; L = 40 • Labour input beyond L= 4o reduces output. • To find average productivity, we hold K=10 and solve AP, = Q/L = 60,000L 1000L? • AP, reaches its maximum where ô APL/L = 60,000 - 2000L = 0; L = 30 • In…