Hurley owns a restaurant. To operate the store, he needs to hire labor (L) and capital (K). e short run production function he is facing is the following: Q(L, K) = L ^0.5 K^0.5 , where capital is non-adjustable. Moreover, a xed cost, F, is imposed on Hurley if the restaurant is open. e product's price is p, assumed to be 1. e 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 a price taker.

(a) Please write down Hurley's profit.

(b) Please solve for Hurley's labor demand. (Express labor demand as a function of wage.)

(c) Show that the labor demand is downward slopping.