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Consider the following stochastic production function: Q=AHKe,>0,>0,andN(0,2) 1. Assuming that A=20,=0.7,=0.3, and =0, fill in the following table. 2. Holding all else constant, let's suppose
Consider the following stochastic production function: Q=AHKe,>0,>0,andN(0,2) 1. Assuming that A=20,=0.7,=0.3, and =0, fill in the following table. 2. Holding all else constant, let's suppose that total factor productivity (A) rises from 20 to 30 . Assuming that =0.7,=0.3, and =0, fill in the following table. How was MPH affected by this technological progress? Explain. 3. Holding all else constant, let's now suppose the production environment receives bad news (for example, a new variation of COVID is 100% resistant to vaccines). More specifically, falls to -2 from 0. Assuming that A=30,=0.7, and =0.3, fill in the following table. How was MPH affected by this bad news? Explain
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