Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider land as an additional productive factor and assume that the production function is: YIAX'IL1_ Consider land as an additional productive factor and assume that
Consider land as an additional productive factor and assume that the production function is: Y A xaL1a where 0 < a < 1, and X is a factor composed of the factors land (D) and capital (K), such that: X D KI- Capital can be produced while the land factor cannot be increased, i.e., it remains in time. Let s, n and be positive constants. (a) Express the production function per worker in terms of land per worker (d) and capital per worker (k). b) Write the equation for the increase in capital per worker (k). (c) Show that this model implies that the level of output per worker tends to zero over time. Why does this result obtain? (d) Suggest some modification in the production function that maintains the productive factor land but prevents the result in (c) from being obtained, showing that result.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started