please help solve this question (a) Define alcompetitive equilibrium for this economy.(b) Derive the production possibilities frontier and explain what its slope captures.(c) Show the competitive equilibrium on a carefully labeled graph, and explain whatcondition holds at that equilibrium.(d) Assuming that the economy is initially in equilibrium, suppose that there is a naturaldisaster that destroys half of the economy's capital stock. What will be the effectsof this disaster on aggregate output, consumption, employment, and the real wage?Explain your results. 6. Consider an economy that consists of consumers, firms, and a government. The rep-resentative consumer has preferences over bundles of consumption goods c, and leisure', satisfying the standard properties: more is preferred to less; preference for diversity;normality. The consumer is endowed with an endowment of total hours h. The represen-tative firm faces a constant returns to scale production function Y = zF(K, Nd), whereY is output of consumption goods, z is TFP, K is physical capital, and Nd is labour1input. The amount of capital is assumed to be given and fixed. The firm is owned by thehousehold, and as a result any real firm profits will be distributed to the consumer in theform of dividends, denoted II. The government purchases a quantity G of consumptiongoods, and finances them by taxing the representative consumer lump-sum. Let T denotereal taxes, and assume that the government balances its budget. Let the real wage perhour worked in terms of the consumption good be w.

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Define al competitive equilibrium for this economy.

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Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).

Question

please help solve this question

(a) Define alcompetitive equilibrium for this economy.
(b) Derive the production possibilities frontier and explain what its slope captures.
(c) Show the competitive equilibrium on a carefully labeled graph, and explain what
condition holds at that equilibrium.
(d) Assuming that the economy is initially in equilibrium, suppose that there is a natural
disaster that destroys half of the economy's capital stock. What will be the effects
of this disaster on aggregate output, consumption, employment, and the real wage?
Explain your results.

6. Consider an economy that consists of consumers, firms, and a government. The rep-
resentative consumer has preferences over bundles of consumption goods c, and leisure
', satisfying the standard properties: more is preferred to less; preference for diversity;
normality. The consumer is endowed with an endowment of total hours h. The represen-
tative firm faces a constant returns to scale production function Y = zF(K, Nd), where
Y is output of consumption goods, z is TFP, K is physical capital, and Nd is labour
1
input. The amount of capital is assumed to be given and fixed. The firm is owned by the
household, and as a result any real firm profits will be distributed to the consumer in the
form of dividends, denoted II. The government purchases a quantity G of consumption
goods, and finances them by taxing the representative consumer lump-sum. Let T denote
real taxes, and assume that the government balances its budget. Let the real wage per
hour worked in terms of the consumption good be w.

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