. In an economy, the total output of all the firms is described by Y = 8 * K^0.25 * L^0.75. For it, The price level is P=20 and the cost of a unit of capital is R=6. There are L=10 workers in the economy. The payments for capital, or the capital bill, amount to RK=752 in the economy. Find the payments for wage, or wage bill, WL, in the economy

Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
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2. In an economy, the total output of all the firms is described by Y = 8 * K^0.25 * L^0.75. For it,

The price level is P=20 and the cost of a unit of capital is R=6. There are L=10 workers in the economy.

The payments for capital, or the capital bill, amount to RK=752 in the economy.

Find the payments for wage, or wage bill, WL, in the economy 

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Step 1

To find the wage bill, we must first find total output (Y) and then subtract the capital account (RK) to get total payments to labor (WL).

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