Suppose that we have an economy whose production can be represented by a Cobb Douglas production function with parameter α=0.3. You may assume that there is no depreciation (i.e. δ=0). a. What fractions of income do capital and labor receive? b. For the following parts, describe what happens to output (in percent), the rental price of capital and the real wage from: i) Suppose that immigration increases the labor force by 10 percent. ii) Suppose that a gift of capital from abroad raises the capital stock by 10 percent. iii) Suppose that a technological advancement raises the value of the parameter A by 10 percent. Type out the correct answer ASAP with proper explanation
Suppose that we have an economy whose production can be represented by a Cobb Douglas production function with parameter α=0.3. You may assume that there is no depreciation (i.e. δ=0). a. What fractions of income do capital and labor receive? b. For the following parts, describe what happens to output (in percent), the rental price of capital and the real wage from: i) Suppose that immigration increases the labor force by 10 percent. ii) Suppose that a gift of capital from abroad raises the capital stock by 10 percent. iii) Suppose that a technological advancement raises the value of the parameter A by 10 percent. Type out the correct answer ASAP with proper explanation
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
Problem 9PA
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Suppose that we have an economy whose production can be represented by a Cobb Douglas production function with parameter α=0.3. You may assume that there is no
a. What fractions of income do capital and labor receive?
b. For the following parts, describe what happens to output (in percent), the rental price of capital and the real wage from:
i) Suppose that immigration increases the labor force by 10 percent.
ii) Suppose that a gift of capital from abroad raises the capital stock by 10 percent.
iii) Suppose that a technological advancement raises the value of the parameter A by 10 percent.
Type out the correct answer ASAP with proper explanation
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