Re: Past ISI questions

Posted by kanv93 on Apr 19, 2015; 3:58pm
URL: http://discussion-forum.276.s1.nabble.com/Past-ISI-questions-tp7596244p7596245.html

This is how i solved it.Pls confirm if it is right or wrong ?

Short Run:
C=10L
for the optimised production L*, K* , Y=L*^0.25 X K*^0.25
         
so y^4=L* X K* => L=Y^4/K*. Therefore C=10Y^4/K*

Long Run

C=10L+10K
here for optimised production dY=0 => L=K
at optimised production Y= L*^0.25 X K*^0.25 => Y=L^0.5 (as L=K) => Y^2=L

Therefore C= 10(L+K)=20L=20Y^2

This is my solution

@ Rajat Pls help me with PEB 15 Ques 6 An economy comprises of a consolidated household sector, a firm sector and the government...