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Hurley owns a restaurant. To operate the store, he needs to hire labor (L) ar capital (K). The short-run production function he is facing is the following Q(L,K)=L0.5 K0.5, where capital is non-adjustable. Moreover, a fixed cos F, is imposed on Hurley if the restaurant is open. The product's price is assumed to be 1. The price of labor and capital are w, and r. We also assum that the market of the restaurant and the labor and capital market is perfect competitive. Hurley is price taker. Please derive the own-wage elasticity demand. a. O b. K 2w-3 O c. K 2w-3 d. K W 2w3 **** *** ** *** W 2K 4w2 2w K 4w2 W K 4w W K 4w2

Hurley owns a restaurant. To operate the store, he needs to hire labor (L) ar capital (K). The short-run production function he is facing is the following Q(L,K)=L0.5 K0.5, where capital is non-adjustable. Moreover, a fixed cos F, is imposed on Hurley if the restaurant is open. The product's price is assumed to be 1. The price of labor and capital are w, and r. We also assum that the market of the restaurant and the labor and capital market is perfect competitive. Hurley is price taker. Please derive the own-wage elasticity demand. a. O b. K 2w-3 O c. K 2w-3 d. K W 2w3 **** *** ** *** W 2K 4w2 2w K 4w2 W K 4w W K 4w2

Survey Of Economics
Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQ
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Hurley owns a restaurant. To operate the store, he needs to hire labor (L) and capital (K). The short-run production function he is facing is the following: Q(L,K)=L0.5 K0.5, where capital is non-adjustable. Moreover, a fixed cost, F, is imposed on Hurley if the restaurant is open. The product's price is p, assumed to be 1. The price of labor and capital are w, and r. We also assume that the market of the restaurant and the labor and capital market is perfectly competitive. Hurley is price taker. Please derive the own-wage elasticity of demand. a. b. C. d. K 2w-3 K 2w-3 K W K 2w3 W 2K 4w2 2w K 4w2 W K 4w2 W K 4w2
Transcribed Image Text:Hurley owns a restaurant. To operate the store, he needs to hire labor (L) and capital (K). The short-run production function he is facing is the following: Q(L,K)=L0.5 K0.5, where capital is non-adjustable. Moreover, a fixed cost, F, is imposed on Hurley if the restaurant is open. The product's price is p, assumed to be 1. The price of labor and capital are w, and r. We also assume that the market of the restaurant and the labor and capital market is perfectly competitive. Hurley is price taker. Please derive the own-wage elasticity of demand. a. b. C. d. K 2w-3 K 2w-3 K W K 2w3 W 2K 4w2 2w K 4w2 W K 4w2 W K 4w2
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