Consider the production function modelled by the following equation:Y₁ = AK₁-α(BH₂)ªL₹where Kt is capital, Ht is human capital, Lt is the number of workers, B is a scalarlarger than 0, A is the (constant) level of technology, 0 < a <1 and 0 <ɛ<1.a) Does this production function satisfy all the neoclassical properties? Discussthe meaning of each property intuitively and mathematically.tImagine that parents invest in the human capital of their children up to the pointwhere the marginal product of physical capital, Kt, is equal to the marginalproduct of human capital, Ht.b) What is the relation between Kt and Ht? Use this relation to write down totaloutput as a function of Kt only.Q3(b) in order to make output a function of K alone, after establishing that Hand K are proportional, should we also establish H=h*L to remove L from theequation? Or are we treating L and H as independent variables like we did forthe previous PSET and question 3(a) above.

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Consider the production function modelled by the following equation: 1-α Y₁ = AK (BH₂) LE where Kt is capital, Ht is human capital, Lt is the number of workers, B is a scala larger than 0, A is the (constant) level of technology, 0 < a <1 and 0 <ɛ

Consider the production function modelled by the following equation: 1-α Y₁ = AK (BH₂) LE where Kt is capital, Ht is human capital, Lt is the number of workers, B is a scala larger than 0, A is the (constant) level of technology, 0 < a <1 and 0 <ɛ

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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