3. Consider the following production function Y = F(K1, N.): %3D Y = F(K,, N) -...

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3. Consider the following production function Y = F(K1, N.): %3D Y = F(K,, N) - yK-bp) [N, + (p – 1)K]p where Y, is output, K, is physical capital, N, is labor, and y > 0, 0 < a < 1, d > 0 and p> 0 are parameters with ad < 1. Note that the subscript denotes dependence with respect to time (i.e., those variables change over time). (a) Assume p- 1 and take Kt as given. Determine the marginal product of labor. (b) Still assuming p - 1, would this function make a good production function, in the economic sense discussed in class? Argue, in favor or against, using the mathematical concepts reviewed in class and provide an economic intuition. 3. Consider the following production function Y = F(K1, N.): %3D Y = F(K,, N) - yK-bp) [N, + (p – 1)K]p where Y, is output, K, is physical capital, N, is labor, and y > 0, 0 < a < 1, d > 0 and p> 0 are parameters with ad < 1. Note that the subscript denotes dependence with respect to time (i.e., those variables change over time). (a) Assume p- 1 and take Kt as given. Determine the marginal product of labor. (b) Still assuming p - 1, would this function make a good production function, in the economic sense discussed in class? Argue, in favor or against, using the mathematical concepts reviewed in class and provide an economic intuition.

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Answer Given that the following production functio... View the full answer