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Suppose the production function in an economy is Y = K0.5L0.5, where K is the amount of capital and L is the amount of labor. The economy begins with 64 units of capital and 16 units of labor. Use a calculator and equations in the chapter to find a numerical answer to each of the following questions.

How much output does the economy produce?

Review text pages 58-61 for a discussion of the Cobb-Douglas production function.
Review text pages 58-61 for a discussion of the Cobb-Douglas production function.
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      Suppose the production function in an economy is Y = K0.5L0.5, where K is the amount of capital and L is the amount of labor. The economy begins with 64 units of capital and 16 units of labor. Use a calculator and equations in the chapter to find a numerical answer to each of the following questions.

      What are the wage and the rental price of capital?

      The wage is equal to unit(s) of output and the rental price of capital is equal to unit(s) of output.

      Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.

      What share of output does labor receive? %

      Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.
      Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.
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          Suppose the production function in an economy is Y = K0.5L0.5, where K is the amount of capital and L is the amount of labor. The economy begins with 64 units of capital and 16 units of labor. Use a calculator and equations in the chapter to find a numerical answer to each of the following questions.

          If a sudden immigration quadruples the size of the population, while the capital stock is unchanged, what is the new level of output? units

          Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.

          What is the new wage and rental price of capital?

          The new wage is equal to unit(s) of output and the new rental price of capital is equal to unit(s) of output.

          Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.

          What share of output does labor receive now?

          Labor continues to receive a share of % of output.

          Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.

          National Income = $

          Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.
          Review text pages 51-61 and Case Studies on pages 58 and 62-63 for a discussion of how the wage and rental price of capital are related to the marginal products of labor and capital. Review pages 58-61 for a discussion of how to compute labor and capital shares using a Cobb-Douglas production function.
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