jnu

[sonal]

in an economy with unlimited supplies of labour the wage rate is fixed at 0.5 unit of consumption good per period.the economy has a stock of machines,each of which employs one unit of labour to produce either one unit of itself or one unit of consumption good.
a)wat is the relative price of consumption good in terms of machine?
b)wat is the rate of profit in the economy?

[sonal]

for an economy,the long run growth rate of gdp is 5% at full employment.the investment rate is 20% and rate of growth of labour force is 2%.then the capital output ratio is
a)2 b)5 c)7 d)10
sir i solved it by the method u had used in an earlier post and am getting 4 which is not there in the options.plz explain...

[Amit Goyal]

Sonal, there is a difference between ICOR and Capital Output ratio. The problem i solved for involves computing ICOR =dK/dY and here you are asked to find K/Y. Here i don't think we have sufficient information to compute K/Y.

[sonal]

thank u sir.......and please solve the first question also

[Amit Goyal]

in an economy with unlimited supplies of labour the wage rate is fixed at 0.5 unit of consumption good per period.the economy has a stock of machines,each of which employs one unit of labour to produce either one unit of itself or one unit of consumption good.
a)wat is the relative price of consumption good in terms of machine?
Relative price is 1
b)wat is the rate of profit in the economy?
Rate of profit is 100%