Suppose the production function in medieval Europe is Y = K 0.5 L 0.5 , where K
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Suppose the production function in medieval Europe is Y = K 0.5L0.5, where K is the amount of land and L is the amount of labor. The economy begins with 100 units of land and 100 units of labor. Use a calculator and equations in the chapter to find a numerical answer to each of the following questions.
a. How much output does the economy produce?
b. What are the wage and the rental price of land?
c. What share of output does labor receive?
d. If a plague kills half the population, what is the new level of output?
e. What is the new wage and rental price of land?
f. What share of output does labor receive now?
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