QUESTION 2 Suppose that an economy's production function is y-ALO.5g0.3y0.7, where Y is output, A is total factor productivity, L is land, K is capital and N is labor. However, we make a mistake and assume that it is given by y-AKO3N0.7. In other words, we do not take into account that landL matters. If K and N do not change, but L grows by 19.9%, what would we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11442%.)
QUESTION 2 Suppose that an economy's production function is y-ALO.5g0.3y0.7, where Y is output, A is total factor productivity, L is land, K is capital and N is labor. However, we make a mistake and assume that it is given by y-AKO3N0.7. In other words, we do not take into account that landL matters. If K and N do not change, but L grows by 19.9%, what would we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11442%.)
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.2P
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![QUESTION 2
Suppose that an economy's production function is y-A/0.5g0.3y0.7, where Y is output, A is total factor productivity, Lis land, K is capital and N is labor. However, we make a
mistake and assume that it is given by y-AK03N0.7. In other words, we do not take into account that land L matters. If K and N do not change, but L grows by 19.9%, what
would we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11.442%.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fec1a66d6-e416-4b97-9f23-2ea1d8ee6e93%2Fe2e9f5a2-1ed1-45e9-bda6-322689c06cc0%2Fr53wfir_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 2
Suppose that an economy's production function is y-A/0.5g0.3y0.7, where Y is output, A is total factor productivity, Lis land, K is capital and N is labor. However, we make a
mistake and assume that it is given by y-AK03N0.7. In other words, we do not take into account that land L matters. If K and N do not change, but L grows by 19.9%, what
would we estimate the growth rate of A to be (approximately, in percent terms)? (Submit your answer with up to two decimals, i.e., 10.22 for 10.22% and 11.44 for 11.442%.)
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