Explore BrainMass
Share

Production Function

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

1) If a country's labor is paid a total of $6 billion, its capital is paid a total of $2 billion, and profits are zero, what is the level of output?

2) Consider a production function that omits the stock of natural resources. When, if ever, will this omission have serious consequences?

3) Consider a production function: Y = AF (K,N,Z), where Z is a measure of natural resources used in production. Assume this production function has constant returns to scale and diminishing returns in each factor.

a) What will happen to output per head if capital and labor both grow but Z is fixed?
b) Reconsider (a), but add technical progress (growth in A).
c) In the 1970's there were fears that we were running out of natural resources and that this would limit growth. Discuss this view using your answers to (a) and (b).

4) Consider the following production function: Y = K.5 (AN).5 , where both the population and the pool of labor are growing at a rate n = .07, the capital stock is depreciating at a rate d = .03, and A is normalized to 1.

a) What are capital's and labor's shares of income?
b) What is the form of this production function?
c) Find the steady-state values of k and y when s = .20.
d) At what rate is per capita output growing at the steady state? At what rate is total out-put growing? What if total factor productivity is increasing at a rate of 2 percent per year (g = .02)?

© BrainMass Inc. brainmass.com October 24, 2018, 7:54 pm ad1c9bdddf
https://brainmass.com/economics/natural-resource-economics/production-function-82668

Solution Summary

The growth rates in output per person are found.

$2.19
See Also This Related BrainMass Solution

Production Function that Can Be Easily Transformed to Linear

A major advantage of the __________________ production function is that it can be easily transformed into a linear function, and thus can be analyzed with the linear regression method.

cubic
power
quadratic
none of the above.

View Full Posting Details