How Does Dividing Both Sides by (Y/L)α Transform the Production Function?

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Homework Help Overview

The discussion revolves around the transformation of a production function in economics, specifically how dividing both sides by (Y/L)α leads to a new expression. The original poster is trying to understand the mathematical reasoning behind this transformation.

Discussion Character

  • Conceptual clarification, Mathematical reasoning

Approaches and Questions Raised

  • The original poster attempts to clarify the steps leading to the transformation of the production function, questioning the logic behind the division by (Y/L)α. Some participants ask for additional context and clarity on notation, while others seek to understand the intended outcome of the original poster's inquiry.

Discussion Status

The discussion is ongoing, with participants seeking more information from the original poster to better understand the problem. There is a focus on clarifying notation and the mathematical steps involved, but no consensus has been reached regarding the interpretation of the transformation.

Contextual Notes

Participants note the need for more background information and clarity on the original poster's goals, as well as the notation used in the equations. There is an indication that assumptions about the mathematical rules being applied may need to be revisited.

albert2008
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Dear People,
This is Production Function and it comes from my economics book. The equation is saying that output per worker (Y/L) is equal to capital per worker (K/L) times the efficiency of labor (E) where alpha is a parameter between zero and one. The chapter is explaining the equation. I don't understand the concept (math) of how the books gets to

(Y/L)1-α= (K/L)α (E)1-α
after it divides both sides by (Y/L)α

Thanks so much and I hope this makes sense

α=alpha (superscript)
1-α=1 minus alpha (superscript)

Y/L=(K/L)α (E)1-α

Rewrite K/L as (K/Y) times (Y/L)

Y/L=(K/Y)α (Y/L)α (E)1-α

Divide both sides by (Y/L)α

(Y/L)1-α= (K/L)α (E)1-α -->Please can someone help me
understand how you get (Y/L)1-α
I don’t understand the logic. Does it have to do with power rule?.
 
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You need to provide more information. Just where does this come from? What are you trying to accomplish. We cannot read your mind, you need to provide some background information.
 
And please explain your notation. You say "Rewrite K/L as (K/Y) times (Y/L)" but then write it as " (K/Y, Y/L)". Do you mean just (K/Y)(Y/L)? Is "1- a" a subscript? I can see no reason for writing 1 if it just multiplying numbers. Finally, what power rule are you talking about? The only power rule I can think of is for differentiating and there is no differentiation here.
 
As the others have asked you to do, you have to explain what are you trying to show? What is the final answer you want to arrive at?

Following your working, all I can say is that dividing the equation by [tex]\frac{Y}{L} \alpha[/tex] gives [tex]\frac{1}{\alpha} = \frac{K}{Y} E (1-\alpha)[/tex].

L disappears because it gets divided by both sides. So that's clearly not what you want.
 

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