eco

Consider a static (one-period) economy. The technology that transforms labor N into output 1" is given by Y = ZNC'KI'\" with 0 1 and A > 0 are constants. Individuals are endowed with 1 unit of time. 1. Write down the rm's maximization problem and nd the optimal labor demand of the rm as a function of to, K, a, and z. Denote the labor demand by Nd. 2. Assuming that z = 1.5, K = 20, and a = 0.6, compute Nd when w = 1. Show all intermediate steps for partial credit. 3. Now plot the labor demand, making sure to label your axis and being as precise as possible (for example, show the point where w = 1 computed before). Feel free to draw it by hand or use Excel to do this