Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A rm has a productivity equation Q = L K2 where L is labour and K is capital. The unit cost (cost for each unit
A rm has a productivity equation Q = L K2 where L is labour and K is capital. The unit cost (cost for each unit of production) is c = 2. The price in the market for the good is 15. The wage for each hour is w=10. Also, there is a x cost equal to K Furthermore, there is a worker with utility equation U = C2 R where C is the consumption and the price of consumption good is PC = l. The maximum working hours (T) per week are 100. So, T = L + R where R is the leisure time. Calculate the Optimum decision for working hours, leisure time and consumption by the consumer. Then calculate the capital investment by the rm for the maximisation of the prots. (Hind: This is the only worker for the firm and he will decide for the working hours, so the firm will decide for the capital. Assume that L = Q)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started