Re: JNU -1999

Posted by Homer Simpson on May 07, 2014; 8:37am
URL: http://discussion-forum.276.s1.nabble.com/JNU-1999-tp7585510p7588788.html

The production function is Min(4K, 6L) - why have you taken min(0.4K, 0.6L)?

Y produced is based on the minimum i get of 4K and 6L. So if the economy is employing 9000 people in period 1, clearly output produced should be 54000. K has to be 13500 for this level of output.

Anything higher is contradictory if we are starting out with the idea that there just isnt enough capital available for the entire labor force to use. Anything below 13500 also doesnt make sense as lesser Y would be produced.