Question

According to the neoclassical theory of distribution, in an economy described by a Cobb–Douglas production function, when average labor productivity is growing rapidly:

1. workers will experience high rates of real wage growth.
2. labor's share of total income will be increasing.
3. economic profits will be positive.
4. labor's share of income will be decreasing.

Answer 1

All of the above

Step-by-step explanation:

According to the neoclassical theory of distribution, in an economy described by a Cobb-Douglas production function, when average labor productivity is growing rapidly: workers will experience high rates of real wage growth. labor's share of total income will be increasing. labor's share of income will be decreasing.