PRACTecon305exam_ak

PRACTecon305exam_ak - Answer Key 1 2 3 4 5 6 7 8 9 10 11 12...

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Page 11 Answer Key 1. B 2. A 3. C 4. A 5. B 6. A 7. C 8. B 9. C 10. B 11. A 12. C 13. B 14. C 15. B 16. A 17. C 18. B 19. B 20. C 21. a. Output is the same in both economies, given the symmetry of the parameters of the productions functions and the equal quantities of labor and capital. b. The MPL is larger in the South Economy. The MLP depends on the value of (1- α ) an average productivity of labor ( Y / L ). Since the average productivity of labor is the sam both countries, differences in the MPL depend on the value of (1- α ), which is larger South Economy (.7) than in North Economy (.3). c. Since factors are paid according to the values of their marginal products, the real wag larger in South Economy, because the MPL is larger in South Economy than in North Economy (from part b). d. Labor’s share of incomes equals (1- α ), which is larger in South Economy (.7) than in N Economy (.3). 22.
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PRACTecon305exam_ak - Answer Key 1 2 3 4 5 6 7 8 9 10 11 12...

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