Assume That the Production Function Is Given by Y =

question 23

Essay

Assume that the production function is given by Y = AK^0.5L^0.5, where Y is GDP, K is capital stock, and L is labour. The parameter A is equal to 10. Assume also that capital is 100, labour is 400, and both capital and labour are paid for their marginal products.
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a.What is Y?
b.What is the real wage of labour?
c.What is the real rental price of capital (the amount of output paid per unit of capital)?

Understand the concept of compound interest and its applications.

Calculate the future value of investments using the formula for compound interest.

Determine the present value of future amounts to achieve specific financial goals.

Apply concepts of time value of money in various financial planning scenarios.

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Definitions:

Guile

The use of clever but usually deceptive methods to achieve one's aims or to manipulate the situation to one's advantage.

Unfair Advantage

An unethical or unjust edge or benefit in a competitive situation that is often gained through exploitation of confidential information or other unethical practices.

Crafty

Exhibiting cleverness or ingenuity, especially in deceiving others.