Consider an economy with production function given by Y = AK0.5 10.5 where A is the total factor productivity (TFP), K is the capital stock and L is the labor input. For simplicity assume capital is fixed and equal to 1. Assume A=200. a. Write the firm's problem of choosing labor demand. Derive the demand for labor as a function of the real wage.

Consider an economy with production function given by Y = AK0.5 10.5 where A is the total factor productivity (TFP), K is the capital stock and L is the labor input. For simplicity assume capital is fixed and equal to 1. Assume A=200. a. Write the firm's problem of choosing labor demand. Derive the demand for labor as a function of the real wage.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Economic Growth: Resources, Technology, Ideas And Institutions

Section17.2: A Production Function And Economic Growth

Problem 4ST

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