The production function for a country is given by Y = F(K, L) = K0.4L0.6. From this production...
Question:
The production function for a country is given by {eq}Y = F(K, L) = K^{0.4} \cdot L^{0.6} {/eq}. From this production function, we can solve for the marginal products of capital and labor. Total physical capital, {eq}K {/eq}, is 6400, and total labor available, {eq}L {/eq}, is 12,000.
a. What is the total income paid to labor in this economy?
b. What is the total income paid to capital owners?
c. How much of the total income consists of profits by firms?
Income Distribution:
In economics, GDP measures the size of the economy but does not provide any information regarding the distribution income. Thus, a country with a higher GDP might in addition have extremely unequal distribution of income.
Answer and Explanation: 1
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View this answera) In equilibrium, total income in an economy is equal to the total amount of output. To calculate total output, we can use the production function...
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Production Function in Economics: Definition, Formula & Example
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Chapter 11 / Lesson 27
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Learn about the production function. Read the production function definition in economics, learn the production function formula. Plus, see graphs and examples.
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