Consider a Production Function for an Economy

question 153

Essay

Consider a production function for an economy:
Y = 20(L.5K.4N.1)
where L is labor, K is capital, and N is land. In this economy the factors of production are in fixed supply with L = 100, K = 100, and N = 100.
a.What is the level of output in this country?
b.Does this production function exhibit constant returns to scale? Demonstrate by example.
c.If the economy is competitive so that factors of production are paid the value of their marginal products, what share of total income will go to land?

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Definitions:

Central Nervous System

The primary information-processing center of the body, consisting of the brain and spinal cord.

Somatic Nervous System

The part of the peripheral nervous system that handles voluntary control of body movements via skeletal muscles.

Sympathetic Nervous System

A component of the autonomic nervous system that readies the body for immediate action during emergencies, known as the "fight or flight" response.

Parasympathetic Nervous System

A division of the autonomic nervous system responsible for rest and digestion, reducing the heart rate and promoting maintenance activities.