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The virus has caused governments to tell people that they can not go out or go...

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Economics

The virus has caused governments to tell people that they can notgo out or go to work.

Using our model what will this forced drop in L do to?

1. Output

2. MPL?

3. Real Wages?

4. MPK?

5. interest rates?

6. Capacity utilization of capital?

Do you think these predictions from the model are actuallyhappening?

If not why?


model is the production function Y=A•f(K,L)

Answer & Explanation Solved by verified expert
3.6 Ratings (603 Votes)
1 Output would fall Itis so because L has fallen with K unchaged And we know that the production function is increasing in L 2 MPL of the existing emplyees has gone up It is so because MPL is decreasing in L    See Answer
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