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The Production Function for an Economy Can Be Expressed as Y

question 25

Essay

The production function for an economy can be expressed as Y = F(K,L), where Y is real GDP, K is the quantity of capital in the economy, and L is the quantity of labor in the economy.
a. If F( ) = 100 + 3K + 9L, what is real GDP if the quantity of capital is 200 and the quantity of labor is 500?
b. What is/are the endogenous variable(s) in this model?
c. What is/are the exogenous variable(s) in this model?


Definitions:

Depreciable Asset Accounting

The accounting process that involves allocating the cost of a tangible asset over its useful life.

Depreciation Expense

The portion of the total cost of a depreciable asset that is allocated as an expense to the income statement in a given period.

Residual Value

The estimated value of a leased asset at the end of the lease term, or the expected value of an asset after its useful life ends.

Depreciation Rate

The percentage or method used to calculate the decrease in value of an asset over time due to use, wear and tear, or obsolescence.

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