Hi. I have this question where the production function is Y = F(K, L) = 2L^0.5 Let
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Question:
Hi. I have this question where the production function is
Y = F(K, L) = 2L^0.5
Let P indicate the price of a unit of good and R the price of a unit of capital. Derive the profit-maximising level of labour demand L*
How to show that in this form (in bold)?
The labour demand is then defined by: F'(L) = v(W/P) with v = 1/(1 + eta_y) and eta_y is represents the market power
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