Suppose an economy has an increase in labor input of 60 percent, ...

[bucstennis@aim.com]

Suppose an economy has an increase in labor input of 60 percent, while output has increased by 100 percent. Assuming no change in total factor productivity, calculate the percentage increase in the capital input.
 
  (Use the Cobb-Douglas production function Y = A .)

Question 2

A credit-rationed household is more likely to immediately ________ of a one-time tax rebate than is a household that is not credit rationed.
 
  A) spend a larger portion
  B) spend a smaller portion
  C) save a larger portion
  D) spend none

[Chou]

Answer to Question 1

2Y = A . Dividing this by the original production function yields 2 = . Solve for x = 3.37. The capital input has increased by 237 percent.

Answer to Question 2

A

[bucstennis@aim.com]

Correct answers!

[Chou]

Great! Please up vote