10H3 - Econ. 102. Homework 3. Due: March 8, 2010. (Honor...

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Econ. 102. Homework 3. Due : March 8, 2010. (Honor the due date) *******. 1. Show your calculation explicitly. Otherwise only partial credit will be given. 2. Use the ruler to draw graphs. (Also show the scale explicitly). 3. E-mail submission of your answer will not be accepted. 4. Do not copy someone else’s answer. *******. 1. Explain the following terms carefully: [8] (a) Production function. (b) MPL and MPK. (c) PxMPL = W. (d) Diminishing marginal product. 2. Consider an economy has the following Cobb-Douglas production function Y = L 1/2 K 1/2 = LK, (a) The factors of production are L = 100, K = 25. Assume that it is at full employment. Find Y. [2] (b) Explain carefully what is the constant returns to scale? Does the production function exhibit the constant returns to scale? Please show it explicitly. [3] (c) Find MPL and MPK by using the formula in NGM. [3] (d) Real total income Y = (W/P)L + (R/P)K. Find the real total income. [3] (e) Explain carefully under what assumptions we can obtain RGDP via
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This note was uploaded on 09/08/2010 for the course ECON 102 at San Jose State University .

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