Multiple Choice
Assume that the production function is Cobb-Douglas with parameter α = 0.3. In the neoclassical model, if the labour force increases by 10 percent, then output:
A) increases by about 10 percent.
B) increases by about 7 percent.
C) increases by about 3 percent.
D) does not increase since the new workers are unemployed.
Correct Answer:
Verified
Correct Answer:
Verified
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