Suppose that 50 percent of the national income in an economy goes to labor.If this economy has a Cobb-Douglas production function,________ of its national income should go to capital.

Question

Quizplus · Accepted Answer

In a Cobb-Douglas production function, the sum of the income shares of labor and capital equals 1 (or 100%). If 50% of the national income goes to labor, then the remaining 50% must go to capital.

Suppose That 50 Percent of the National Income in an Economy