Question
Let us assume a neoclassical economy with two factors of production: Capital and Labor. Y=AK*2/3L*1/3. a)...
Let us assume a neoclassical economy with two factors of production: Capital and Labor. Y=AK*2/3L*1/3. a) (5 points) Derive an equation for the marginal product of labor. b) (5 points) Suppose that immigration increases the labor force by 20 percent. How much does the rental price of capital change? c) (5 points) Given the equilibrium nominal wage and price level, W = 4 and P = 2, and A = 8 and K = 8 find the amount of labor, i.e. L=?
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