Question: 9. Suppose rms are perfech competitive and the eoonomv's production function Is Y=AKL 9. a. b. Suppose firms are perfectly competitive and the economy's production

9. a. b. Suppose firms are perfectly competitive and the economy's production

9. Suppose rms are perfech competitive and the eoonomv's production function Is Y=AK\"L\

9. a. b. Suppose firms are perfectly competitive and the economy's production function is Y = The production function's derivatives are Y/L = and Y/K = OAAKO*LOS/K. (7 points) Given the production function provided above, what happens to the real wage rate if the amount of capital increases? Why? What is the economic intuition for this? (8 points) Given the production function provided above, suppose the parameter A doubles in value. Calculate the percent change in total output and the percent change in real wages. Briefly explain the economic intuition. 6

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