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Consider the following economy:

Y = F(K,L) = 200K1/2L1/2 K = 121
L = 81

C = 1,300 - 100r + 0.8(Y - T) I = 2,000 - 300r
G = 2,800

T = 0.25Y

How do I calculate Real wage rate, labor income and real rental rate?

   

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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C=1000+0.6(Y-T)

T=1500

G=2000

I=1100-100r

L(r,Y)=1000+0.5Y-500r

M(s)=12000

P=2

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