Question: Question 3. (17 points) Suppose that the production function is Y = K^0.2 L^0.8 in an economy, when K is capital and L is labour.

Question 3. (17 points) Suppose that the production function is Y = K^0.2 L^0.8 in an economy, when K is capital and L is labour. a. (11 points) What fractions of income do capital and labour receive? Explain your answer. b. (6 points) How much is economic profit? Explain your answer.

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!

Question 3. (17 points) Suppose that the production function is Y = K^ 0.2 L^ 0.8 in an economy, when K is capital and L is labour. a. (11 points) What fractions of income do capital and labour...

.Answer the following questions. Exercise 1 (Solow growth model, 20 points). Suppose that the production function is Y = zKIN and that 8% of capital wears out every year. Assume that the rate of...

PLEASE ANSWER ASAP!!!! THANK YOU AND ON PAPAER POLEASE Question 2 (15 marks) Suppose that the production function for output in an economy is given by Yt=Kt0.75N0.25 The number of workers, N, is...

Problem 1: Closing Output Gaps [15 Points] Suppose that the production function for the economy is given by: Y = 141131;; {(3:54 Suppose that this economy has 255 units of Labour, and 31 units of...

Kindly help me solve these problems. Show step by step workings Problem 4 - Optimal production The Acme Corp produces widgets using labor (L) and capital (K) according to the production, Q = F(L, K)...

Short-answer questions Note: You should show your step-by-step answers to the questions below. If only final answers were provided, no marks will be counted for the question. Question 3 (11 points)....

Previous Page Next Page Page 3 of 5 Question 3 (36 points) Suppose that the following production function is given: 9 = min( , 1). a-) (6 points) For the above production function, find the...

allocation represent a Pareto improvement? Explain your answer using indifference curves to illustrate it. 3. (20 points) Suppose Alex and Brianna are consumers in a pure exchange economy, with two...

Please answer all the questions with steps and a detailed explanation. This will be question that pulls in a lot of parts of this course. So, consider the following economy: Suppose that the...

Question 3 (25 points) - Chapters 10 & 11/12 Utopia is a closed economy and is characterized by the following equations: Consumption: C = 3500 + 0.90(Y - T) - 9000r Investment: I = 12000 - 8000r...

Consider the following data set: (a) Draw a scatter diagram with the x-axis starting at 0 and ending at 30 and with the y-axis starting at 0 and ending at 20. (b) Compute the linear correlation...

Use Taylor's method of order two to approximate the solution for the following IVP. Give the values of the function at each mesh point and attach your code to the solution. y' = 2-2ty, 0t 1, y(0) =...

If the coefficient of correlation (r) = 1.00, then: (a) All the data points must fall exactly on a straight line with a slope that equals 1.00. (b) All the data points must fall exactly on a straight...

Given the information below: a . This project will be completed in days. b . Is task A critical? ( Type yes or no ) : c . Task B has a total float of days.Activity Immediate Predecessors Duration (...

You work for a yoga studio in your community as an instructor. The manager has approached you about your thoughts on introducing a bonus based on the number of classes taught and the total number of...

What additional benefits would you recommend that APTN offer employees? Why?

You were recently promoted to a management position. Your company is in the retail grocery business and has a policy that managers are paid a salary instead of an hourly wage. What are the advantages...