Question

Suppose that medieval England was a single, large, price-taking firm that produced one type of output with a constant-returns-to-scale Cobb-Douglas production function, q L0.5k0.5 Labor and capital have inelastic supplies (everyone works and all capital is used). The Black Death killed (1 0) workers, causing the number of workers to fall from L to L*-θし. Show how much the wage, w, rose. If p is normalized to 1, K-400, L-400, and θ-0.4, calculate the change in factor prices. Suppose the share of workers killed by the Black Death was 0.6. The change in the wage (Aw) is Aw: (Enter your response rounded to three decimal places)

Answer 1

P1, K 400, -400 Betwe any da mage, P.M o 5 1400 Betove dawa then u- 645 FA万