A Small Country's Aggregate Production Function Per Hour of Labor

question 140

Multiple Choice

A small country's aggregate production function per hour of labor given by Y = K^1/2.Its depreciation rate is 1% and its investment rate is 10%.What is its steady-state level of output?

• A) 1
• B) 10
• C) 100
• D) 1,000

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Definitions:

Marginal Revenue

The increase in profit from selling an extra unit of a good or service.

Average Nightly Room Rate

A measure used in the hospitality industry to calculate the average price paid per room per night.

Monopolistic Competition

A marketplace setup where plenty of businesses distribute products that resemble each other but are not duplicates, allowing them a partial degree of marketplace power and the ability to individualize their offerings.

Pure Competition

A market structure characterized by a large number of small firms, homogenous products, and easy market entry and exit, leading to price takers rather than price makers.