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2. The Production Model. In the middle of the fourteenth century, an epidemic known as the Black Death killed about a quarter of Europe's population, about 34 million people. While this was an enormous tragedy, the macroeconomic consequences might surprise you: over the next century, wages are estimated to have been higher than before the epidemic. (Hint: Use the traditional production function Y = AK L to derive your answer). (a) Use the production model to explain why wages might have increased. (b) Can you attach a number to your explanation? in the model, by how much would wages rise if a quarter of the population died from disease?

2. The Production Model. In the middle of the fourteenth century, an epidemic known as the Black Death killed about a quarter of Europe's population, about 34 million people. While this was an enormous tragedy, the macroeconomic consequences might surprise you: over the next century, wages are estimated to have been higher than before the epidemic. (Hint: Use the traditional production function Y = AK L to derive your answer). (a) Use the production model to explain why wages might have increased. (b) Can you attach a number to your explanation? in the model, by how much would wages rise if a quarter of the population died from disease?

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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2. The Production Model. In the middle of the fourteenth century, an epidemic known as the Black Death killed about a quarter of Europe's population, about 34 million people. While this was an enormous tragedy, the macroeconomic consequences might surprise you: over the next century, wages are estimated to have been higher than before the epidemic. (Hint: Use the traditional production function Y = AKL to derive your answer). (a) Use the production model to explain why wages might have increased. (b) Can you attach a number to your explanation? in the model, by how much would wages rise if a quarter of the population died from disease?
Transcribed Image Text:2. The Production Model. In the middle of the fourteenth century, an epidemic known as the Black Death killed about a quarter of Europe's population, about 34 million people. While this was an enormous tragedy, the macroeconomic consequences might surprise you: over the next century, wages are estimated to have been higher than before the epidemic. (Hint: Use the traditional production function Y = AKL to derive your answer). (a) Use the production model to explain why wages might have increased. (b) Can you attach a number to your explanation? in the model, by how much would wages rise if a quarter of the population died from disease?
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