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Problem Set 4 From: Mash-Erdene Ganbold (1154248) 1. (a) y = A·L·f(k) = A L f I K AL ,1M = A L f Hk,1L r = MP K = ΔY ΔK = Δy ΔK r = ΔIAL f I K AL ,1MM ΔK = A L f ' I K AL ,1M 1 AL = f ' Hk,1L = f ' HkL Using chain rule: f(g(x)) = f’(g(x))·g(x), where f HgH xLL = f I K AL ,1M gH xL = K AL (b) y = A·L·f(k) = A L f I K AL ,1M w = MP L = ΔY ΔL = Δy ΔL w = ΔIAL f I K AL ,1MM ΔL = A f ' I K AL ,1M - K AL 2 L + A f I K AL ,1M = A· f ' I K AL ,1M - K AL + A f I K AL ,1M = AA f ' I K AL ,1M - K AL + f I K AL ,1ME = A[f(k)-kf’(k)] Using product & chain rule: (f·g)’ = f’·g+f·g’ where f H xL = A f I K AL ,1M gH xL = L
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Problem Set 4.1 Solutions

Nov 11, 2015

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Solutions to Problems Set 4.1 for Macroeconomics course at University of Vienna
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  • Problem Set 4

    From: Mash-Erdene Ganbold (1154248)

    1.

    (a)

    y = ALf(k) = A L fI KAL

    , 1M = A L fHk, 1L

    r = MPK =Y

    K=

    y

    K

    r =IALf I K

    AL,1MM

    K= A L f ' I K

    AL, 1M 1

    AL

    = f ' Hk, 1L = f ' HkL

    Using chain rule:

    f(g(x)) = f(g(x))g(x), where

    fHgHxLL = fI KAL

    , 1MgHxL = K

    AL

    (b)

    y = ALf(k) = A L fI KAL

    , 1M

    w = MPL =Y

    L=

    y

    L

    w =IALf I K

    AL,1MM

    L= A f ' I K

    AL, 1M - K

    AL2 L+A fI KAL , 1M

    = Af ' I KAL

    , 1M - KAL+A fI K

    AL, 1M

    = AA f ' I KAL

    , 1M - KAL+ fI K

    AL, 1ME

    = A[f(k)-kf(k)]

    Using product & chain rule:

    (fg) = fg+fg where fHxL = A fI K

    AL, 1M

    gHxL = L