Re: ISI 2011 ME II Q. 8
Posted by onionknight on Apr 23, 2015; 6:33pm
URL: http://discussion-forum.276.s1.nabble.com/ISI-2011-ME-II-Q-8-tp7596136p7596312.html
The question says that 1.) F is homogenous of degree one in L and K
2.) Labour and capital remain fully employed
Now if this is the case then for part A we would get different answers for different F. For instance let
F= L+K and F=sqrt(LK)
Let initial values be A,Y,L,K and in period two Y becomes 1.09Y, K becomes 1.04K and L becomes 1.03L. Now using the two different functions we'd get different ratios of new A and old A. Please help
URL: http://discussion-forum.276.s1.nabble.com/ISI-2011-ME-II-Q-8-tp7596136p7596312.html
The question says that 1.) F is homogenous of degree one in L and K
2.) Labour and capital remain fully employed
Now if this is the case then for part A we would get different answers for different F. For instance let
F= L+K and F=sqrt(LK)
Let initial values be A,Y,L,K and in period two Y becomes 1.09Y, K becomes 1.04K and L becomes 1.03L. Now using the two different functions we'd get different ratios of new A and old A. Please help
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