Answered

Explore Westonci.ca, the top Q&A platform where your questions are answered by professionals and enthusiasts alike. Explore a wealth of knowledge from professionals across different disciplines on our comprehensive platform. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

Suppose the current level of output is 5000. If the elasticities of output with respect to capital and labor are 0.3 and 0.7, respectively, a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to :_______

Sagot :

Answer:

5575

Explanation:

The computation is shown below;

Factor      Elasticity          Increase        Effective Increase

                      A                        B      A × B

Capital      0.3                                 10%      3.00%

Labor        0.7                                  5%       3.50%

Increase due to Productivity                      5.00%

Total Increase in Output                             11.50%

(3% + 3.5% + 5%)  

Original Output                                              5000

Increase in Output (5000 × 11.5%)                 575

Increase Output (5000 + 575)                      5575

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. We're glad you chose Westonci.ca. Revisit us for updated answers from our knowledgeable team.