# PS2 - Econ 3140 Spring 2010 Problem Set 2 Due Monday...

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Econ 3140 Spring 2010 Problem Set 2 Due Monday February 15 (on lecture time, late homeworks may not be accepted) 1. An economy X produces two goods: Computers and Bicycles. Consider the following data: Computers Year 1 Year 2 Bicycles Year 1 Year 2 Output 5 10 Output 200 250 Compute (Note: this is not necessarily covered in the book): (a) The Laspeyres quantity index, with base year (year 1) prices as weights. (b) The Paasche quantity index, with current year (year 2) prices as weights. (c) The chain weighted index which is the geometric mean of the other two. (d) The growth rate of the real GDP. 2. Suppose the economy&s production function is Y = AK 0 : 3 N 0 : 7 . If K = 2000 , N = 100 , and A = 1 , then Y = 246 . If K and N both rise by 20% , and A is unchanged, by how much does Y increase? 3. Question Seven from Abel et.al., Chapter 3, analytical problems 4. Suppose that Freedonia has GDP equal to 2000 million, the capital stock is 1700 million, and the number of employees equals 70 million. The production function is Y = AK 0 : 3 N 0 : 7 . Calculate total factor productivity of the economy.

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## This note was uploaded on 11/30/2011 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell.

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PS2 - Econ 3140 Spring 2010 Problem Set 2 Due Monday...

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