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1. A country has the following production function: Y=F(K,AN)=6K(AN)1' I. A country has the following production function: Y = = OV(AN) I-a where K is
I. A country has the following production function: Y = = OV(AN) I-a where K is physical capital, N is labor input, A is technology, and O is a constant of the production function. The growth rate of labor and technology are gn and g A respectively. The rest of the settings follow the settings in Chapter 12. (a) Is this production function characterized by constant returns to scale? Explain. (b) Are there decreasing returns to capital? Explain.
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