Consider the production function: Y = K²/3L2/3 Suppose the supply of capital is 8 and the supply of labor is 27. In equilibrium, the real wage rate W/P and the real rental rate of capital R/P will be W/P = 3/4 and R/P = 4/9 W/P = 4/9 and R/P = 3/4 W/P = 2/27 and R/P = 3/2 W/P = 3/2 and R/P = 2/27 O O O O
Consider the production function: Y = K²/3L2/3 Suppose the supply of capital is 8 and the supply of labor is 27. In equilibrium, the real wage rate W/P and the real rental rate of capital R/P will be W/P = 3/4 and R/P = 4/9 W/P = 4/9 and R/P = 3/4 W/P = 2/27 and R/P = 3/2 W/P = 3/2 and R/P = 2/27 O O O O
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider the production function: Y = K?/3L2/3
Suppose the supply of capital is 8 and the supply of labor is 27. In equilibrium, the real wage rate W/P and
the real rental rate of capital R/P will be
W/P = 3/4 and R/P = 4/9
W/P = 4/9 and R/P = 3/4
W/P = 2/27 and R/P = 3/2
W/P = 3/2 and R/P = 2/27
For the production function, Y = KO. L0. , suppose the labor force increases by 10% (while capital
remains the same). Output Y increases by approximately
10%
7%
5%
3%
O O O O](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0e4ec90-ed92-488f-912b-133729910ca9%2F2efef040-1c5e-474e-8338-1f8d72eb45e0%2Fo47omn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the production function: Y = K?/3L2/3
Suppose the supply of capital is 8 and the supply of labor is 27. In equilibrium, the real wage rate W/P and
the real rental rate of capital R/P will be
W/P = 3/4 and R/P = 4/9
W/P = 4/9 and R/P = 3/4
W/P = 2/27 and R/P = 3/2
W/P = 3/2 and R/P = 2/27
For the production function, Y = KO. L0. , suppose the labor force increases by 10% (while capital
remains the same). Output Y increases by approximately
10%
7%
5%
3%
O O O O
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