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Q. Consider a production function for an economy:Y = 20 (L.5K.4N.1)where L is labor, K is capital also N is land. In this economy the factors of production are in fixed supply with L = 100, K = 100 also N = 100.
a. Illustrate what is the level of output in this nation?
b. Does this production function exhibit constant returns to scale. Demonstrate by example.
c. If the economy is competitive so that factors of production are paid the value of their marginal products, illustrate what is the share of total income that will go to land?
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