Suppose that an economicbproduction function cobb-douglas with parameter alpha = 0.3
a) what fraction of income do capital and labour receive
b)suppose that immigration increase the labour force by 10%. What happen to total output(in percent)?, The rental price of capital ? , The real wage?
a) The fraction of income that capital and labour receive is 0.7 and 0.3 respectively.
b) The total output will increase by 3%. The rental price of capital will remain unchanged, while the real wage will decrease by 3%.