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Suppose the Payments to Capital and Labor Are (W*L*)/Y* = (wL/rK)=Y\left( w ^ { * } L ^ { * } / r ^ { * } K ^ { * } \right) = Y ^ { * }

Question 37

Multiple Choice

Suppose the payments to capital and labor are (w*L*) /Y* = 2/3 and (r*L*) /Y* = 1/3, respectively. One implication of this result is:


A) (wL/rK) =Y\left( w ^ { * } L ^ { * } / r ^ { * } K ^ { * } \right) = Y ^ { * }
B) wLrK=Yw ^ { * } L ^ { * } - r ^ { * } K ^ { * } = Y ^ { * }
C) wL×rK=Yw ^ { * } L ^ { * } \times r ^ { * } K ^ { * } = Y ^ { * }
D) wL+rK=Yw ^ { * } L ^ { * } + r ^ { * } K ^ { * } = Y ^ { * }
E) (wL/Y) (rK/Y) =0\left( w ^ { * } L ^ { * } / Y ^ { * } \right) \left( r ^ { * } K ^ { * } / Y ^ { * } \right) = 0

Correct Answer:

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