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2. (Problem 3-10 of Borjas.) Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output

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2. (Problem 3-10 of Borjas.) Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is constant at $50 per unit. The production function is f(E, K) = E1/2K1/2 so that the marginal product of labor is MPF = K 1/2 NIH a. If the current capital stock is fixed at 1,600 units, how much should the firm employ in the short run? b. How much profit will the firm earn

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