To evaluate: The partial derivatives of
QL and
QK.
b.
To determine
To estimate: The change in Q when K increases from
K=20toK=20.5 with the help of linear approximation method.
c.
To determine
To estimate: The change in Q with the help of linear approximation method.
d.
To determine
To sketch: The several level curves for the given production function in the first quadrant of the LK plane for
Q=1,2,3.
e.
To determine
To compare: The result when
L=2 is moved along the positive k- direction by using part (d) and the value obtained in part (a),
QK is both consistent or not.
f.
To determine
To compare: The result when
K=2 is moved along the positive L- direction by using part (d) and the value obtained in part(a)
QL is both consistent or not.
Keynesian consumption function expresses consumption as a function of disposable income.Specifically, it statesConst = B0 + B1 YDt + Ut,where: Const: aggregate personal consumer expenditures (PCE) in year t.YDt: Disposable income in year t.B1 is called the marginal propensity to consumer (MPC). Economists have found that the value ofMPC differs in the short run and the long run. Economists also found that in the long run the properform of the consumption function is:Const = B1 YDt + utUsing the “Consumption fn Data” file posted on part 2 of this question, estimate the consumption function in theU.S. You need to run two regressions:• Using 1960 to 1980 data (include all 1960 and 1980 data in the regression), estimate theshort run consumption function in the U.S.• Using all the data set, estimate the long run consumption function in the U.S.Part 1 of 2
Process A
Output : x = 3; y = 1
Input: L = 2; K= 1
Process B
Output : x = 2; y = 1
Input: L = 1; K = 2
Utility Function of indivs. : U=xy.
L = 500 units; K = 500 units
1. In equilibrium, what are the relative
prices of x, y, L and K?
2. What is the effect on the distribution
of income by factor shares of (a) wage
tax ton L employed and (b) excise tax e
on y?
%3D
%3D
The price elasticity of demand for a monopolistic firm's product is constant. When the firm's price is
P1 = 12, the daily demand for their product is qı = 200, and when the firm's price is p2 = 13, the
daily demand is q2 = 175.
As a function of the price they set, the firm's daily revenue is...