Question: Assume that the production function is given by Y = AK 0.5 L 0.5, where Y is GDP, K is capital stock, and L is

Assume that the production function is given byY=AK0.5L0.5, whereYis GDP,Kis capital stock, andLis labor. The parameterAis equal to 10. Assume also that capital is 100, labor is 400, and both capital and labor are paid for their marginal products.

a. What isY?

b. What is the real wage of labor?

c. What is the real rental price of capital (the amount of output paid per unit of capital)?

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