Assume That the Production Function Is Cobb-Douglas with Parameter $\alpha$ = 03 in the Neoclassical Model, If the Labor Force Increases

question 133

Multiple Choice

Assume that the production function is Cobb-Douglas with parameter $\alpha$ = 0.3. In the neoclassical model, if the labor force increases by 10 percent, then output:

• A)increases by about 10 percent.
• B)increases by about 7 percent.
• C)increases by about 3 percent.
• D)does not increase since the new workers are unemployed.

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Definitions:

Economic System

An organized arrangement for producing, distributing, and consuming goods.

Centralized Location

A position or place that serves as the central point for distribution or coordination of activities and services.

Formal Rules

Explicitly stated guidelines and laws that govern behavior and procedures within organizations or societies.

Conduct

The manner in which a person behaves, especially within a particular context or environment.