Suppose that production function is Y = K^(AN) and competitive firms hire capital and labor to produce output. Let r be the return paid to capital and w be the real wage paid to labor. Which of the following is true? a profit-maximizing firm hires capital and labor until average products equal factor prices O labor income share is 1/3 real return to capital r grows at the rate of productivity growth O real wages w grows at the rate of productivity growth

Suppose that production function is Y = K^(AN) and competitive firms hire capital and labor to produce output. Let r be the return paid to capital and w be the real wage paid to labor. Which of the following is true? a profit-maximizing firm hires capital and labor until average products equal factor prices O labor income share is 1/3 real return to capital r grows at the rate of productivity growth O real wages w grows at the rate of productivity growth

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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