Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. Consider a Cobb-Douglas production function given by Y=AKL1'. Deter-:1 (a) Let Y? L denote labour productivity, i.e., the average amount of output per worker.

image text in transcribed
2. Consider a Cobb-Douglas production function given by Y=AK"L1"'. Deter-:1 (a) Let Y? L denote labour productivity, i.e., the average amount of output per worker. Another name for this the average product of labour. Is the average product of labour larger or smaller than the marginal product of labour? Explain. (b) Does an increase in K increase or decrease the marginal product of labour? Explain. (c) Suppose that capital is paid the marginal product of capital and labour is paid the marginal product of labour. that is rental rate r = MPH wage rate to = MPL Does an increase in K increase or decrease labour's share of income? Explain. (d) Suppose the growth rate of productivity is 3,; = Chill, the growth rate of the capital stock is pp; = CID-i, the growth rate of the labour force is 9;, = 0.02 and or = lf. 1What is the growth rate of output? 1What about the growth rate of output per worker

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Roger A. Arnold

12th Edition

1285738306, 978-1285738307

More Books

Students also viewed these Economics questions

Question

Write short notes on Interviews.

Answered: 1 week ago

Question

Define induction and what are its objectives ?

Answered: 1 week ago

Question

Discuss the techniques of job analysis.

Answered: 1 week ago

Question

Relax your shoulders

Answered: 1 week ago