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Suppose that an economy’s production function is Cobb-Douglas with parameter α=0.36, and is given by 𝑌=𝐴𝐾∝𝐿1−∝ What fraction of income do capital and labor receive? Show complete derivations

Suppose that an economy’s production function is Cobb-Douglas with parameter α=0.36, and is given by

𝑌=𝐴𝐾∝𝐿1−∝

What fraction of income do capital and labor receive? Show complete derivations.

a. labor income is 36% of GDP while capital income is 64% of GDP.

b. labor income is 36% of GDP while capital income is 36% of GDP.

c. labor income is 64% of GDP while capital income is 36% of GDP.

d. labor income is 64% of GDP while capital income is 64% of GDP

Apr 12 2021 View more View Less

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