The production function in the two sectors are
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Posted on: 12/05/2016 09:03 AM Due on: 12/05/2016
So the question is from the book Economic growth by david weil 3rd edition. The question is Consider a country in which there are two sectors called sector 1 and 2. The production function in the two sectors are : Y1=L^1/2 Y2=L^1/2 where L1 is the number of workers employed in sector 1 and L2 is the number of workers emplyed in Sector 2. The total number of workers in the economy is L. The only diffrence between the sectors is that in sector 1 workers are paid their marginal products, where as in Sector 2 theya re paid their average products. Workers move freely between the sectors so that wages are equal. Calculate how many workers will work in each sector.

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The production function in the two sectors are