Question
The production function in medieval Europe is Y = K0.5L0.5, where K is the amount of land and L is the amount of labour. The
The production function in medieval Europe is Y = K0.5L0.5, where K is the amount of land and L is the amount of labour.
The economy begins with 100 units of land and 100 units of labour.
- How much output does the economy produce?
- What are the wage and rental price of land?
- What share of output does labour receive?
- If plague kills 25% of the population, what is the new level of output?
- What is the new wage and rental price of land?
- What share of output does labour now receive?
You will find examples of the Cobb-Douglas production function online/ internet to help you with your answer.
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Environmental And Natural Resource Economics International Edition
Authors: Thomas H Tietenberg, Lynne Lewis
10th Edition
1292060794, 9781292060798
