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April 16, 2014

Homework Help: economic - emergency

Posted by ellen on Wednesday, September 27, 2006 at 10:48am.

Question concerning production function - Cobb douglas. Given is:
y=(0,2K-1 + 0,8L-1)-1
If wk = wL =1, what will k and L be?
Now suppose again:
y=(0,2k-1 + 0,8L-1)-1 and
z=K1/3*L2/3. Is product y or z always more demanding to capitals (in case of labour)? if not, find where % of wL/wk is changing in price.
Notes: -1 after K and L is square and also -1 after ()and 1/3 and 2/3


Im sorry, but I dont understand your notation. You say -1 means "square". However, what does 0,2K-1 mean?
Is it "2 times (K-squared)"?

If so, your first equation becomes y=[2*(K)^2 + 8*(L)^2]^2. Here, again, I'm confused. With the outer squared term, you get one beast of a production function, requiring more calculas than I can remember. Without the outer squared term you get a production function that is, unusual but not unheard of in teaching economics, and mathmatically tractable. (Or it could be that I am missing something).

BTW, the traditional cobb-douglas is your z-equation.


Sorry my english but its root not squared, sorry for this problem but I'm still have problem with this math

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