Econ 100B Section 5 Answers

Symmetric to what we just did for output and capital

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Unformatted text preview: change in an exogenous variable will shift the curve while a change in an endogenous variable will constitute a movement along the curve. iii. The supply of capital is fixed: KS = 1. Supply may be sloped in your textbook, but use vertical (fixed) KS and LS for class purposes to make it exogenous and thus easier to use in our model. iv. In equilibrium, capital demand equals capital supply, and: 1. the real cost of capital, rk, equals the marginal product of capital 2. capital demanded equals capital supplied III. The Production Function: Output (Y) and Labor (L) a. Symmetric to what we just did for Output and Capital. Instead of focusing on capital we are now focusing on labor. b. The production function between...
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This note was uploaded on 02/25/2014 for the course ECON 100B taught by Professor Wood during the Spring '08 term at Berkeley.

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