In an Economy with Production Function Y = 1

question 41

Multiple Choice

In an economy with production function Y = 1.5 × K0.3L0.7, K = 343, and L = 512. If factor markets are in equilibrium, then the rental price of capital is (approximately) ________, and the real wage is (approximately) ________.

• A) 0.5; 0.8
• B) 7; 8
• C) 0.9; 1.35
• D) 1.4; 0.4
• E) 0.6; 0.9

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