Q2) The production function of a small economy is Y=K0.3L°7. K is the amount of capital (land), L is the amount of labor. The economy starts with 70 units of land and 80 units of labor. a) How much output does the economy produce? b) What are the wage and the rental price of land? c) What share of output does labor receive? d) If a plague kills half the population, what is the new level of output? e) What is the new wage and rental price of land?

Q2) The production function of a small economy is Y=K0.3L°7. K is the amount of capital (land), L is the amount of labor. The economy starts with 70 units of land and 80 units of labor. a) How much output does the economy produce? b) What are the wage and the rental price of land? c) What share of output does labor receive? d) If a plague kills half the population, what is the new level of output? e) What is the new wage and rental price of land?

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 9PA

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