Question: 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

Assume that a Cobb-Douglas production function is a good representation of

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 that Congress passes a law that guarantees all adults an annual income of $80,000 whether they work or not. What happens to the marginal productivity of labor? The marginal productivity of labor decreases The marginal productivity of labor remains the same The marginal productivity of labor increases

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