Question: Question 8 The Neoclassical growth model is based on the existence of an aggregate production function-showing the relationship between labor ( L ), capital (

Question 8

The Neoclassical growth model is based on the existence of an aggregate production function-showing the relationship between labor (L), capital (K), technology (T), and real GDP (Y). The table below shows various values for L, K, and T. In all cases, the aggregate production function is assumed to take the following form:

Labor (L) Capital (K) Technology (T) Real GDP (Y)

10 20 1 ?

15 20 1 ?

20 20 1 ?

25 20 1 ?

10 20 1 ?

15 30 1 ?

20 40 1 ?

25 50 1 ?

20 20 1 ?

20 20 3 ?

20 20 4 ?

20 20 5 ?

8.1 Complete the table.

8.2 In the first part of the table, capital is constant but labor is increasing. What property of the production function is displayed? Explain.

8.3 In the second part of the table, capital and labor are increasing by the same proportion. What property of the production function is displayed? Explain.

8.4 What is the source of growth shown in the third part of the table?

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