Econ303 Homework 2B 1 1 4 points Assume an economy in which only Iphone and Samsung Galaxy are produced In year one 500 million Iphone are produced and consumed and its price is 260 while 1300 million Galaxy are produced and consumed and its price is 200 In year two 600 million Iphone are produced and consumed and its price is 240 while 1250 million Galaxy are produced and its price is 190 a Using year 1 as the base year calculate the GDP price deflator in years 1 and 2 and calculate the rate of inflation between years 1 and 2 from the GDP deflator b Using year 1 as the base year calculate the CPI in years 1 and 2 and calculate the CPI rate of inflation Explain any differences in your results between parts a and b 2 2 points Suppose that the labor force participate rate is 79 the total working age population is 100 million and the number of unemployed is 2 5 million Determine i the labor force ii the number of employed workers iii the unemployment rate and iv the employment population ratio 3 6 points Using the following data on GDP per capita in the United Kingdom compute the average annual growth rates during each of the 5 decades and the average annual growth rates over the 50 years Year 1960 1970 1980 1990 2000 2010 Real GDP per capita 2011 dollars 11 879 15 308 18 571 24 799 31 640 35 689 4 8 points The production function takes the following form Y F K N zK 0 3 N 0 7 a Write the expressions for marginal product of labor and marginal product of capital b Suppose that z 150 and K 2000 Compute the marginal product of labor for N 1 2 3 4 5 Draw the marginal product of labor curve c Suppose that the total factor productivity increases z 180 while K 2000 as before Recompute the marginal product of labor for N 1 2 3 4 5 Draw the new marginal product of labor curve and compare it with the curve you obtained in part a Econ303 Homework 2B 2 d Suppose that the total factor productivity stays the same while capital input increases Now z 150 but K 4000 Recompute the marginal product of labor for N 1 2 3 4 5 Draw the new marginal product of labor curve and compare it with the curve you obtained in part a
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