I've problems with solving these questions, does anyone know how to do them ? I'd be very thankful for any help. I'm not here saying,
I've problems with solving these questions, does anyone know how to do them ? I'd be very thankful for any help.
What are the returns to scale of functions I-V?
Calculate marginal productivity of capital and marginal productivity of labour for those functions?
Knowing, that initial (for year 1) capital per worker (p.c.) is k=2, depreciation rate δ=0.2, savings rate s=0.4 and the economy is characterised by production function V, calculate capital p.c., consumption p.c., investment p.c. and net change of capital p.c. for the first 5 years starting from the initial point.
Using parameters from point 3., calculate steady state for function V.
Now imagine an economy, that makes only toy cars (the price of a toy car is 10$). Production of this economy is illustrated by production function I. Let us now imagine, that in the state of equilibrium K=100 and L=900. Calculate real and nominal wages for the workers. Try to use analogous method to calculate real and nominal rents for capital owners.
How is the income from production of toy cars (like in point 5.) distributed among the group of capitalists and workers? Comment on it.
im trying to find any materials to help me for hours now.. any help will be very appreciated
What year of economics is that? 3rd year undergrad?
Detiri17 thanks for the ideas.. ill try to solve them according to what you said.
Second bit is indeed likely a Solow growth model question.
I haven't covered the last part either, but as you're discussing the proportion of the income given to labour and vice versa for owners of capital, you'll probably want to find which equals the real wage when a firm is maximising profits. Using that I think you can extract the overall income given to labour and hence its proportion compared to rent for owners of capital.