Problem
Suppose the production function of an economy is Y = K0-510-5, where K is the amount of land and L is the amount of labor. The economy begins with 100 units of land and 100 units of labor. Find the numerical answer for each of the following:
i. How much output does the economy produce?
ii. What are the real wage and real rental price of land?
iii. What share of output does labor receive?
iv. If a plague kills half the population, what is the new level of output?
v. What are the new wage and rental price of land?
vi. What share of output does labor receive now?