QUESTION 2Suppose that an economy's production function is y-A/0.5g0.3y0.7, where Y is output, A is total factor productivity, Lis land, K is capital and N is labor. However, we make amistake and assume that it is given by y-AK03N0.7. In other words, we do not take into account that land L matters. If K and N do not change, but L grows by 19.9%, whatwould we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11.442%.)

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QUESTION 2 Suppose that an economy's production function is y-ALO.5g0.3y0.7, where Y is output, A is total factor productivity, L is land, K is capital and N is labor. However, we make a mistake and assume that it is given by y-AKO3N0.7. In other words, we do not take into account that landL matters. If K and N do not change, but L grows by 19.9%, what would we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11442%.)

QUESTION 2 Suppose that an economy's production function is y-ALO.5g0.3y0.7, where Y is output, A is total factor productivity, L is land, K is capital and N is labor. However, we make a mistake and assume that it is given by y-AKO3N0.7. In other words, we do not take into account that landL matters. If K and N do not change, but L grows by 19.9%, what would we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11442%.)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.8P

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