Question: Suppose that the production function is given by Y = AK ^ 0 . 4 N ^ 0 . 6 . What is the change

Suppose that the production function is given by Y=AK^0.4N^0.6. What is the change in output if both capital and labor rise by 31% and total factor productivity falls by 31%? The answer is 0.Since the production function is constant Returns to Scale, when both K and N rise by 31%, so does output. But since A is falling by 31% also, this by itself lowers output by 31%. Hence, the overall effect on output is 0. But I don't understand the answer. My calculators says: Assume A =1, K=1, and N=1: (1 : 0.69)(1.1.31)0.4(1 : 1.31)0.6=0.903910.4.10.61. Assume A =2, K =3, and N =5: (20.69)(3.1.31)0.4.(5.1.31)0.62-(3)0.4.(5)0.6=0.9039 Why the answer is 0, not 0.9039? Please give detailed explanation. Thank you.

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