SUPPOSE THAT THE PRODUCTION FUNCTIONS IS Y=AK^.35 L ^.65, the NUMBER of workers equals 800, the...
SUPPOSE THAT THE PRODUCTION FUNCTIONS IS Y=AK^.35 L ^.65, the NUMBER of workers equals 800, the capital stock is 150000 and real gdp is 750000. What is the value of total factor productivity?
Homework Answers
Answer
Y=AK.35 L.65 --------------------------------------(1)
where Y = Real GDP(or Output) = 750000, L = number of workers = 800 , K = Capital stock = 150000 and A = Total Factor Productivity that we have to find
Putting these given values in (1) we get
750000 = A *150000.35 800.65
=> A = Total Factor Productivity = 750000/(150000.35 800.65)
= 150.11
Hence the value of total factor productivity = 150.11
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