# Question: suppose the production function in an economy is yk05l05 where...

###### Question details

Suppose the production function in an economy is
Y=K^{0.5}L^{0.5}, where K is the amount of capital
and L is the amount of labor. The economy begins with 100 units of
capital and 100 units of labor. Use a calculator to the equations
below to find the answer to each of the Useful equations.

MPL= (1-a)K^{a}L^{-a}

MPK= ak^{a-1}L^{1-a}

a. How much output does the economy produce?

b. What are the real wage and the real rental price of capital?

c. What share of output does labor receive?

d. If a disease kills half the population, what is the new level of output?

e. What is the new real wage and real rental price of capital?

f. What share of output does labor receive now?