Assume that a Cobb-Douglas production function is a good representation of the economy, the substitution effect...

 

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Assume that a Cobb-Douglas production function is a good representation of the economy, the substitution effect is stronger than the income effect, and that the economy was initially at equilibrium. Suppose a zombie outbreak spreads throughout the United States. Although the outbreak is ultimately eradicated, the United States nevertheless suffers a severe drop in population (and corresponding decrease in the labor force) with no reduction in machinery and equipment. real wage is completely flexible, what will happen to the marginal productivity of If the labor? There would be a decrease in the marginal productivity of labor There is not enough information to determine if a change in the marginal productivity of labor would occur. There would be no change in the marginal productivity of labor There would be an increase in the marginal productivity of labor Assume that a Cobb-Douglas production function is a good representation of the economy, the substitution effect is stronger than the income effect, and that the economy was initially at equilibrium. Suppose a zombie outbreak spreads throughout the United States. Although the outbreak is ultimately eradicated, the United States nevertheless suffers a severe drop in population (and corresponding decrease in the labor force) with no reduction in machinery and equipment. real wage is completely flexible, what will happen to the marginal productivity of If the labor? There would be a decrease in the marginal productivity of labor There is not enough information to determine if a change in the marginal productivity of labor would occur. There would be no change in the marginal productivity of labor There would be an increase in the marginal productivity of labor

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