Question: Given a production function Y t ? b = a r ( A ) K t 1 3 b a r ( L ) 2

Given a production function Yt?b=ar(A)Kt13bar(L)23, if ?bar(A)=2,bar(L)=4,bar(s)=0.2, and ?bar(d)=0.05 :
(a) Calculate the steady-state level of capital and output. Show your work.
(b) Does this production function exhibit constant returns to scale or does it exhibit diminishing marginal
returns? Explain, and define the difference between these two concepts.
 Given a production function Yt?b=ar(A)Kt13bar(L)23, if ?bar(A)=2,bar(L)=4,bar(s)=0.2, and ?bar(d)=0.05 : (a)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!