Suppose the production function is (Y=A K^{0.3} N^{0.7}) and that in 2000, (K=1000, N=100), and (Y=199.5). In
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Suppose the production function is \(Y=A K^{0.3} N^{0.7}\) and that in 2000, \(K=1000, N=100\), and \(Y=199.5\). In 2010, capital, labor, and output have doubled, so \(K=2000\), \(N=200\), and \(Y=399\).
a. By what percentage did productivity grow from 2000 to 2010 ?
b. If output had risen to 798 instead of 399 and capital and labor had doubled, by what percentage would productivity have grown from 2000 to 2010 ?
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