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Intermediate Economics 3 Would you please explain how step two turns to step three? I know what is first order condition but I don't understand
Intermediate Economics 3
Would you please explain how step two turns to step three? I know what is first order condition but I don't understand how it turns to step three.
5. (a) Mathematically: max VC + 0.5 . V1 - L C,L (1) s.t. PC = WL+ RK C= WL+ (2) Or in words: The firm chooses how many goods C to consume and how much labor L to supply to maximize its utility subject to its budget constraint. (b) The household's first-order condition for the optimal choice of L is: 1 W 1 2 P = 0 WL+ BK (3) Solve for L: L = (W/P) 2 - 42 ( R/P) K 42 ( W/ P ) + ( W/ P ) 2 (4) or, slightly more simplified: W/P -42 R/P L = W /P K 42 + W/PStep by Step Solution
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