Suppose that production function is Y=K1/3(AN)2/3 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? Group of answer choices A) a profit-maximizing firm hires capital and labor until average products equal factor prices B) labor income share is 1/3 C) real return to capital r grows at the rate of productivity growth D) real wages w grows at the rate of productivity growth

Suppose that production function is Y=K1/3(AN)2/3 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? Group of answer choices A) a profit-maximizing firm hires capital and labor until average products equal factor prices B) labor income share is 1/3 C) real return to capital r grows at the rate of productivity growth D) real wages w grows at the rate of productivity growth

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.14P

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