Question
Consider the following production function: Y (t) = F (K(t),A(t)N (t)), where Y (t) denotes output, K(t) denotes total capital input, A(t) denotes knowledge,and N
Consider the following production function:
Y (t) = F (K(t),A(t)N (t)),
where Y (t) denotes output, K(t) denotes total capital input, A(t) denotes knowledge,and N (t) denotes total labour input. F (,) is the aggregate production function. Note thatA(t)N (t) is commonly referred as effective labour, and technological progress that enters the production function in this fashion is known aslabour-augmenting or Harrod-neutral.
a) Derive the intense form (per unit of effective labour) of the production function, using the abstract production function above.
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