) What is the equation of the long-run aggregate supply curve? The income velocity of money is constant, and the money supply is fixed: V = 0.15 M = 5600 The production function is Y = F(L, K) = 8 x √L x √K The endowment of resources is given by the input combination (L, K) = (49, 25)
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) What is the equation of the long-run
The income velocity of money is constant, and the money supply is fixed:
V = 0.15
M = 5600
The production function is
Y = F(L, K) = 8 x √L x √K
The endowment of resources is given by the input combination
(L, K) = (49, 25)
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- A firm faces the following production function, Y = AKa L¹-a (1) Here Y is output, K is capital, L is fixed labour, and A is a measure of technology. The firm uses an optimal amount of capital determined by the condition, (2) MPK = r + 8 Where MPK is the marginal productivity of capital, r is the real interest rate, and Ổ is the depreciation rate. Suppose that a = 0.5, L = 25, and A = 20. Further, the real interest rate, r, is 2% and capital depreciates at a rate (8) of 18% per year. What is the optimal amount of capital this firm should install? [2 marks] Now suppose that A increases to 25, while a, L and & remain unchanged. Further, the optimal capital stock remains at the amount you found in part (c). What does this mean must have happened to the real interest rate? Find the new real interest rate and draw a clear diagram showing MPK and user cost of capital lines before and after the changes to A and r. [4 marks]The production function in an economy is. Y = 5(4.00N-0.0188N²), where the marginal product of labor is given by: MPN = 5(4.00 -0.0376N). The equation for the labor supply curve is: NS = 48.0 + 8(1 - t)w, where NS is the amount of labor supplied, w is the real wage and t is the tax rate on wage income. The tax rate is t = 0.20. Determine the labor demand function. (Enter your responses rounded to two decimal places); -0-0w ND=1. A new coal-fired power plant will increase aggregate production.Which element of the aggregate production function Y = A × F(K, H) willthis power plant increase?A) AB) FC) KD) H
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