If the production function describing an economy is Y = 100 K0.25L0.75, then the share of output going to labor:
A)is 25 percent.
B) is 75 percent.
C)depends on the quantities of labor and capital.
D)depends on the state of technology.

Question

Quizplus · Accepted Answer

The share of output going to labor is determined by the exponent on labor in the production function. In this case, labor is raised to the power of 0.75, which means that labor receives 75 percent of the output. The quantities of labor and capital and the state of technology are not relevant for determining the labor share in this production function.

If the Production Function Describing an Economy Is Y =