e. A firm in a given industry has an incentive to use the new technology if and only if the expected profits from adopting this technology are positive. i- Derive the condition under which no firm has an incentive to adopt the new technology when n=0. ii-Derive the condition under which firm has an incentive to adopt the new technology when n=1. f- Is it possible that these two equilibrium conditions are satisfied simultaneously? Which parameter is critical for this to be the case? g- Provide an example of a modern technology whose implementation, or the lack of its implementation, could be explained by this model. 2- Consequence of an Immigration Boom Consider an economy that is initially in a balance growth path. Assume that there is an immigration boom starting in period to that last until period t₁, t₁ > to. As a consequence of the immigration boom, the growth rate of the population is temporarily higher, n' > n for to t₁. Analyze the short and long-run implications of the immigration boom for the dynamics of technology, capital and output per-capita. To answer this question, use a graphical analysis of the model of endogenous technological progress described by the following equations: À(t)/A(t) = 0(S¸L(t)/A(t))¹-¢ and k(t)/k(t) = sk(k(t)/A(t))ª¯¹(1 − SR)¹-a — (d+n).
e. A firm in a given industry has an incentive to use the new technology if and only if the expected profits from adopting this technology are positive. i- Derive the condition under which no firm has an incentive to adopt the new technology when n=0. ii-Derive the condition under which firm has an incentive to adopt the new technology when n=1. f- Is it possible that these two equilibrium conditions are satisfied simultaneously? Which parameter is critical for this to be the case? g- Provide an example of a modern technology whose implementation, or the lack of its implementation, could be explained by this model. 2- Consequence of an Immigration Boom Consider an economy that is initially in a balance growth path. Assume that there is an immigration boom starting in period to that last until period t₁, t₁ > to. As a consequence of the immigration boom, the growth rate of the population is temporarily higher, n' > n for to t₁. Analyze the short and long-run implications of the immigration boom for the dynamics of technology, capital and output per-capita. To answer this question, use a graphical analysis of the model of endogenous technological progress described by the following equations: À(t)/A(t) = 0(S¸L(t)/A(t))¹-¢ and k(t)/k(t) = sk(k(t)/A(t))ª¯¹(1 − SR)¹-a — (d+n).
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter10: Strategy: The Quest To Keep Profit From Eroding
Section: Chapter Questions
Problem 10.3IP
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