improved formatting
Kelly
• 319
• 1
• 9

GDP per worker is the ratio of GDP (Y) to the number of people employed (N), it is Y divided by N. Some books denote it as little Y (y). Divide both sides of the production function by N (remember to use the rules of dividing exponents for N on the left hand side i.e. subtract the exponents, for N it will be 2/3-1 = 1/3).

Simplify the equation, so on the left hand side you should have (K/LN) raised to the power of 1/3. You can replace this fraction with little k (k), raised to the power of 1/3. The little k represents capital per worker then.

If I was not such a newbie to this website, I would type the equations out. Sorry about that.

1. $$Y = A K^{1/3} N^{2/3}$$

2. Divide by N

3. $$Y/N = A K^{1/3} N^{2/3-1}$$

4. $$Y/N = A K^{1/3} N^{-1/3}$$

5. $$Y/N = A (K/N)^{1/3}$$

6. $$y = A (k)^{1/3}$$

Kelly
• 319
• 1
• 9

GDP per worker is the ratio of GDP (Y) to the number of people employed (N), it is Y divided by N. Some books denote it as little Y (y). Divide both sides of the production function by N (remember to use the rules of dividing exponents for N on the left hand side i.e. subtract the exponents, for N it will be 2/3-1 = 1/3).

Simplify the equation, so on the left hand side you should have (K/L) raised to the power of 1/3. You can replace this fraction with little k (k), raised to the power of 1/3. The little k represents capital per worker then.

If I was not such a newbie to this website, I would type the equations out. Sorry about that.