Understanding the Equation Y/L =(K/L)^α (E)^1-α

  • Thread starter albert2008
  • Start date
In summary, the conversation is about a problem involving an equation with superscript and the steps to get to the final answer. The main points are: rewriting the equation, multiplying both sides by L, rearranging the terms, and understanding the rule of negative exponents. The final answer is Y=K^a (EL)^1-a. The conversation also includes a question about Gog and the responders' beliefs in God.
  • #1
albert2008
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0
Dear People would someone be able to explain in more detail this problem. I can't follow the answer.
a=alpha (its a superscript)

Y/L =(K/L)^α (E)^1-α

These are steps to get to final answer

Y/L=K^a/L^-a * E/E^a Step 1 - rewrite

Y=K^a/L^a * EL/E^a Step2 multiply by L

How did L^-a became L^a after multiplying by L. Is this rule of negative exponent??

Now with some algebra, we can rearrange it; Step 3

Y=K^a * EL/(EL)^a

please help me understand in detail how you end up with K^a after multiplying by L. How can L cancel out L^a

Answer

Y=K^a (EL)^1-a

Gog Bless
 
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  • #2
Albert2008 said:
Y/L=K^a/L^-a * E/E^a Step 1 - rewrite
This doesn't follow from the given equation. It's Ka/La

You could write it as

Y/L = KaL-a * E/Ea

Y=K^a * EL/(EL)^a
please help me understand in detail how you end up with K^a after multiplying by L. How can L cancel out L^a
Simply multiply the right side by L. So we now have L1-a on the right side. Put the one with the positive power, L as the numerator and L-a as La in the denominator. Remember that L-a = 1/La. Then move this term onto the E/Ea fraction. This can be done because the order of multiplication doesn't matter.
 
  • #3
Albert2008 said:
Dear People would someone be able to explain in more detail this problem. I can't follow the answer.
a=alpha (its a superscript)

Y/L =(K/L)^α (E)^1-α
There is no "problem" here. Just an equation. What do you want to do with it?

These are steps to get to final answer

Y/L=K^a/L^-a * E/E^a Step 1 - rewrite

Y=K^a/L^a * EL/E^a Step2 multiply by L

How did L^-a became L^a after multiplying by L. Is this rule of negative exponent??
It doesn't. First you may have copied step 1 incorrectly: (K/L)^a= K^a/L^a or K^aL^(-a), not K^a/L^-a. Second, the two terms, (K/L)^a and E^(1-a) are multiplied, not added- the "distributive law" does not apply and you do not multiply both terms by L.
Multiplying both sides of Y/L= K^a/L^a * E/E^a by L gives Y= (K^a/L^a)* (EL)/E^a. Whoever is doing this chose to multiply the second term by the L, not the first, so that stays the same.

Now with some algebra, we can rearrange it; Step 3

Y=K^a * EL/(EL)^a

please help me understand in detail how you end up with K^a after multiplying by L. How can L cancel out L^a
All they did here was take the "L^a" from the denominator of the first fraction and put it in the denominator of the second. Since you multiply fractions by multiplying numerators and denominators separatly, it doesn't matter:
[tex]\frac{a}{b}\frac{c}{d}= \frac{ac}{bd}= a\frac{c}{bd}[/tex]

Answer

Y=K^a (EL)^1-a

Gog Bless
Do you believe in Gog?
 
  • #4
I want to thank all of you both taking your time and helping me out. I need to go back and review my calculus book.
 
  • #5
Defennder said:
This doesn't follow from the given equation. It's Ka/La

You could write it as

Y/L = KaL-a * E/Ea

Simply multiply the right side by L. So we now have L1-a on the right side. Put the one with the positive power, L as the numerator and L-a as La in the denominator. Remember that L-a = 1/La. Then move this term onto the E/Ea fraction. This can be done because the order of multiplication doesn't matter.

[/Thank you so much for taking the time in helping me out.]
 
Last edited:
  • #6
HallsofIvy said:
There is no "problem" here. Just an equation. What do you want to do with it?


It doesn't. First you may have copied step 1 incorrectly: (K/L)^a= K^a/L^a or K^aL^(-a), not K^a/L^-a. Second, the two terms, (K/L)^a and E^(1-a) are multiplied, not added- the "distributive law" does not apply and you do not multiply both terms by L.
Multiplying both sides of Y/L= K^a/L^a * E/E^a by L gives Y= (K^a/L^a)* (EL)/E^a. Whoever is doing this chose to multiply the second term by the L, not the first, so that stays the same.


All they did here was take the "L^a" from the denominator of the first fraction and put it in the denominator of the second. Since you multiply fractions by multiplying numerators and denominators separatly, it doesn't matter:
[tex]\frac{a}{b}\frac{c}{d}= \frac{ac}{bd}= a\frac{c}{bd}[/tex]


Do you believe in God?

Thank you so much for helping me out.
God bless!
 

Related to Understanding the Equation Y/L =(K/L)^α (E)^1-α

1. What does the formula Y/l =(k/l)^α (e)^1-α represent?

The formula Y/l =(k/l)^α (e)^1-α is known as the Cobb-Douglas production function, which is commonly used in economics to model the relationship between inputs (labor and capital) and output (Y). It represents the production output per unit of input, where α represents the elasticity of output with respect to capital and 1-α represents the elasticity of output with respect to labor.

2. How is the exponent α determined in the formula?

The exponent α is determined by analyzing the production data of a specific industry or firm. It is estimated through regression analysis, where the data is fitted to the Cobb-Douglas production function to determine the value of α that best represents the relationship between inputs and output.

3. What is the significance of the constant k in the formula?

The constant k in the formula represents the total factor productivity (TFP) of an industry or firm. It accounts for the technological progress, efficiency, and other factors that contribute to the overall output of an industry or firm, apart from the inputs of labor and capital.

4. How does the formula account for economies of scale?

The Cobb-Douglas production function accounts for economies of scale by allowing the exponent α to vary. If α is greater than 1, it indicates that output increases at a faster rate than inputs, which suggests economies of scale. Conversely, if α is less than 1, it indicates diseconomies of scale, where output increases at a slower rate than inputs.

5. Can the formula be applied to all industries and firms?

While the Cobb-Douglas production function is a widely used economic model, it may not be applicable to all industries and firms. This is because it assumes a specific relationship between inputs and output, which may not hold true for all industries. Additionally, the values of α and k may vary significantly across different industries and firms.

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