Suppose that Freedonia has GDP equal to 2000 million,the capital stock is 1700 million,and the number of employees equals 70 million.The production function is Y = AK^0.25^N^0.75^.Total factor productivity of the economy is approximately equal to A)0)09. B)2)61. C)4)19. D)12.87.

Question

Quizplus · Accepted Answer

The production function given is Y = AK^0.25L^0.75. Given Y (GDP) = 2000 million, K (capital stock) = 1700 million, and L (number of employees) = 70 million, we can solve for A (total factor productivity). Rearranging the production function to solve for A gives us A = Y / (K^0.25 * L^0.75). Plugging in the given values: A = 2000 / (1700^0.25 * 70^0.75) ≈ 12.87.

Suppose That Freedonia Has GDP Equal to 2000 Million,the Capital