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Hi, please explain well with step and step explanation , the formulas, do use diagrams to explain if necessary . Thank you! A country has

Hi, please explain well with step and step explanation , the formulas, do use diagrams to explain if necessary . Thank you!

A country has 10 percent unemployment. The production function is Cobb-Douglas with = . .

(a) By how much will production increase if unemployment is reduced to 5 percent while the capital stock, the labour force, and technology are unchanged? Explain your result.

(b) If unemployment remains permanently on the lower level, is it likely that the capital stock will remain unchanged?

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