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Consider Two Competitive Economies That Have the Same Quantities of Labour

question 51

Essay

Consider two competitive economies that have the same quantities of labour (L = 400) and capital (K = 400), as well as the same technology (A = 100). The economies of the countries are described by the following Cobb-Douglas production functions:

North Economy: Y = A L.3K.7

South Economy: Y = A L.7K.3

a.Which economy has the larger total production? Explain.
b.In which economy is the marginal product of labour larger? Explain.
c.In which economy is the real wage larger? Explain.
d.In which economy is labour's share of income larger? Explain.​


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Final Statement

A conclusive written summary or account that details the final positions or outcomes of a particular event, process, or financial period.

Admit Evidence

The process by which a court agrees to consider certain facts or documents as part of the information used to make a legal decision.

Contradictory

Describes statements, beliefs, or ideas that are directly opposed to each other and cannot be true at the same time.

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Evidence outside of a written contract which is not admissible to alter, contradict, or add to the terms of the written agreement.

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