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QUESTION
Suppose that an economy's production function is Cobb-Douglas with parameter alpha=0. One way to solve B., assume numerical values, e. Assume A=1,...
Suppose that an economy's production function is Cobb-Douglas with parameter alpha=0.3. One way to solve B.-D., assume numerical values, e.g.: Assume A=1, K=1, L0=1 and L1=1.1. What if a gift of capital from abroad raises the capital stock by 10 percent. What happens to total output?
