Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a simple economy where the only output is maize. Each period, a farmer starts with a certain amount of maize ( y ). That

Consider a simple economy where the only output is maize. Each period, a farmer starts with a certain amount of maize \( y \). That farmer then chooses how much of this maize to plant, and how much to consume this period. The proportion of maize planted is \( p \), so that the farmer plants \( p y y \) quantity of maize, and consumes \( (1-p) y \) quantity of maize. The maize available in the next period depends on the farmer's skill and on how much maize was planted this period. This production function is represented by \( s f(x) \) where \( s \) is the skill of the farmer and \( x \) is the quantity of maize planted. a) Assume the farmer plants a constant fraction of maize, so that \( p \) is the same every period (and \( p>0 \) ). If the production function is \( f(x)=x^{a} \), what will happen to a farmer's output in the long run if \( a>1 \) ? What will happen if \( 0

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

Plenitude The New Economics Of True Wealth

Authors: Juliet Schor

1st Edition

1594202540, 9781594202544

More Books

Students also viewed these Economics questions