Y=ALαK1-α A= 1.5 α= 0.5 L=Labor  K= Capital Factor Markets: Labor Supply (L^S)= 100 Labor Demand (L^D)= 200-5(W/P) Supply of Capital (K^S) = 100 Demand for Capital (K^D)= 200-4(R/P)

QUESTION 1 For the production function Q = K0.1L0.1 and the budget 124 = 5K + 2L find the NEW LEVEL in the optimal employment of capital (K) after wages change by a factor of 0.5 while maintaining the same level of output. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 = 1.2, 1.14 = 1.1).

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QUESTION 1 For the production function Q = KO.2L0.1 and the budget 133 = 7K + 5L find the optimal employment of L. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 1.2, 1.14 = 1.1).

Calculate the labor and capital share of output: Y=ALαK1-α A= 1.5 α= 0.5 L=Labor  K= Capital Factor Markets: Labor Supply (L^S)= 100 Labor Demand (L^D)= 200-5(W/P) Supply of Capital (K^S) = 100 Demand for Capital (K^D)= 200-4(R/P) (W/P)= real wage rate (R/P)= real rental rate

For each of the following sectors, identify (no explanations needed) the most important determinant/factor in its R (bid rent curve): • manufacturing sector: • office sector: • household sector:

Assume the following production function (photo aswell) q = [0.3k^(-1)+ 0.7l ^(-1)] ^(-1) a)  Determine the rate of technical substitution, RTS. b)  Determine the elasticity of substitution. c)  What would happen to the capital intensity if the relative factor price w/v were to increase by 10%? d)  If the elasticity of substitution were higher than what you calculated in (b), would the effect of a 10% increase in the relative factor price w/v on the capital intensity be higher or lower than what you calculated in (c)? Explain your reasoning.

True/False/Uncertain and Explain Input output models unrealistically assume perfectly elastic factor supply curves, so the results obtained from input-output models are invalid. Elaborate.