Assume That the Production Function Is Cobb-Douglas with Parameter α

question 27

Multiple Choice

Assume that the production function is Cobb-Douglas with parameter α = 0.3. In the neoclassical model, if the labour 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:

Characteristics

Defining traits or features that distinguish individuals, groups, or things.

Elderly

The Elderly refers to individuals of a significantly advanced age, typically those who are past retirement age, highlighting concerns related to healthcare, social security, and the aging process.

Population

The total number of individuals inhabiting a particular territory or geographic area, often analyzed in terms of density, distribution, and composition.

Percentage

A proportion or share in relation to a whole, represented as a fraction of 100.