(Production function) A technological breakthrough raises a country’s A ̄ by 10%, but capital and labor are all unchanged. Assuming the country’s production function is given by Y = A ̄K1/2L1/2. (a) Figure out what impact this breakthrough will have on the MPK and MPL in that country. (b) Draw a picture Y of against K holding L fixed. 1 (c) Redraw the picture with A ̄ increased to 1.1A ̄ but L fixed at same level as before.

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A firm faces the following production function, Y = AKL¹-a (1) Here Y is output, K is capital, L is fixed labour, and A is a measure of technology. The firm uses an optimal amount of capital determined by the condition, MPK = r + 8 (2) Where MPK is the marginal productivity of capital, r is the real interest rate, and 8 is the depreciation rate. (a) Using equations (1) and (2) find an expression for K*, the optimal amount of capital the firm should use. (b) Referring to you result from part (a), comment on what happens to K* when each of the following variables change (holding other variables constant), The measure of technology (A) falls The depreciation rate (8) increases The real interest rate (r) increases (i) (ii) (iii) [Hint: For each of parts (i)-(iii) you are being asked to comment on what happen to K* if just the variable mentioned in the question changes. Your answers should state whether K* increases, decreases, or stays the same. This should be accompanied for each part by…

Suppose that the production function is Cobb-Douglas. That is, the production function is . Further, assume that the parameter α = 0.3. Suppose that a gift of capital from abroad raises the capital stock by 10 percent. What happens to total output (in percentage change)? The real rental price of capital (in percentage change)? The real wage (in percentage change)? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.