Answer each question in as much detail as possible

. Your submission MUST BE your own work. DO NOT violate honor code. University rules and regulations will be followed if any violation of honor code is detected. You may submit before the due date but no late submission will be accepted. Your answers should be preferably typed and emailed to me by the due date. If you are unable to type with scientiÖc notations, clearly write your answers and scan the pages into a single Öle and upload it on ELEARN. For data related work, simply attach the Microsoft Excel Öle with your email submission. DO NOT submit any hardcopy.
1. Consider the production function of a competitive Örm Q = AK L where symbols have their usual meaning. Assume that the rate of interest is given by r = 0:05 and the wage rate is given by w = 15. Furthermore, assume that the market price of the output is given by P = 50. Derive Q, , Kand Lassuming that A = 100, = 0:10 and = 0:10.
2. Consider question #1. Trace the equilibrium outcomes (Q, , Kand L) as rate of interest changes smoothly from 0:5% to 5%. For plotting purposes, take the inter- vals to be 0:01% apart. (You should be using Microsoft Excel to answer this question) Given your plot, explain how monetary policy (leading to changes in the rate of interest) can lead to changes in output, proÖt, demand for capital and demand for labor. ?
3. Consider question #1. Trace the equilibrium outcomes (Q, , Kand L) as wage rate changes smoothly from 7:50 to 15. For plotting purposes, take the intervals to be 0:05 apart. (You should be using Microsoft Excel to answer this question) ?
4. Consider question #1. Trace the equilibrium outcomes (Q, , Kand L) as market price of the output changes smoothly from 45 to 55. For plotting purposes, take the intervals to be 0:05 apart. (You should be using Microsoft Excel to answer this question) ?
5. Work out questions 1 4 with the new parameter values of A = 200, = 0:10 and = 0:10. Given your answers for question #5, discuss the role that technological improvement plays in changing output, proÖt, demand for capital and demand for labor. Also reáect on the e¢ cacies of monetary policy (changes in the rate of interest) ?and minimum wage regulations under scenarios of improved production technologies. ?

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