Use b as the exponent for physical capital, and c as the exponent for human capital. Assume that b = 0.25 and c = 0.60. Further assume that per person income of a rich country is 10 times that of a poor country.
-Refer to the information above.What is the value of the exponent for uneducated labor (L)?
A)0.75
B)0.40
C)0.35
D)0.15

Question

Quizplus · Accepted Answer

The sum of the exponents in a Cobb-Douglas production function should equal 1. Given b = 0.25 and c = 0.60, the exponent for uneducated labor (L) is 1 - (b + c) = 1 - (0.25 + 0.60) = 0.15.

Use B as the Exponent for Physical Capital, and C