Question

Question 2
The country of Myrule has produced the following quantity of gauges and potatoes with the price of each liste
1:00
ADOLID
T-
Pie
COOKIE
Gauges
Porta
9000
Quantity
10000
5000
1000
58
a) Using 2001 as the base year, what are the price indexes for 2001 and 2007?
b) What is the inflation rate using this index?
What is the percent change in real output using this index?​

Answer 1

Answer:

Y = 20K0.4L0.6 K = 100 and L = 100 a) Level of output : Substituting the values of K and L in the given production function, output can be obtained. Y = 20*(100)0.4* (100)0.6 = 20 * 6.3