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QUESTION
In a certain country, output is produced using only labor and land. The production function is Y=AXαL1-α where Y is output, X is the quantity of land, and L is the quantity of labor. Factors of produc
In a certain country, output is produced using only labor and land. The production function is
Y=AXαL1-α
where Y is output, X is the quantity of land, and L is the quantity of labor. Factors of production are paid their marginal products. In this country there are 100 acres of land and 200 workers. Land earns a rent of $1,000 per acre per year. Workers are paid a wage of $1 per hour, and work 2,000 hours per year. What is the value of α?
