304_final_review - There are no taxes of any sort What is the user cost of capital What amount of capital will allow this firm to maximize profit 3

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1. Suppose the marginal product of labor is MPN = 200 - 0.5N , where N is aggregate employment. The aggregate quantity of labor supplied is 300 + 8w, where w is the real wage. What is the equilibrium quantity of employment? 2. A firm has current and future marginal productivity of capital given by MPK = 10,000 - 2K, and marginal productivity of labor given by MPN = 55 - 2N. The price of capital is $5000, the real interest rate is 10%, and capital depreciates at a 15% rate. The real wage rate is $15.
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Unformatted text preview: There are no taxes of any sort. What is the user cost of capital? What amount of capital will allow this firm to maximize profit? 3. A large open economy has desired national saving of S d = 1200 + 1000 r w , and desired national investment of I d = 1000 - 500 r w . The foreign economy has desired national saving of S d for = 1300 + 1000 r w , and desired national investment of I d for = 1800 - 500 r w . The equilibrium world real interest rate equals 4. Ch. 9 exercise from Monday...
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This note was uploaded on 09/15/2009 for the course ECON 304 taught by Professor Stone,mistyriano,alejandro during the Fall '07 term at Pennsylvania State University, University Park.

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