Question
The economy's aggregate production function is given by: = + Where A and B are constant parameters while K and L denote, respectively, the economy's
The economy's aggregate production function is given by:
= +
Where A and B are constant parameters while K and L denote, respectively, the economy's stock of capital and labour. Answer the following question:
1) Assuming perfect competition in all markets where workers are paid a wage W and the rental rate of capital is R, what is the expression for the share of GDP accruing to labour, that is WL/PY. How does this expression differ from what you would obtain if the aggregate production function were Cobb-Douglas?
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Statistics Informed Decisions Using Data
Authors: Michael Sullivan III
5th Edition
978-0134135373, 134133536, 134135377, 978-0134133539
