Macroeconomics

Exercise 57 Let f(k)=F(k,1), assume inelastic labor supply normalized to one. Assume that both F(k,n) and (i,k) are linearly homogeneous in their arguments, and amend the profit function to =zf(kt)wtpt(it+(it,kt)). Show that under the stated assumptions the average and marginal q are equivalent./Hint: Notice that wt=zFn(kt,1). Moreover, since F is homogeneous of degree one, we have zf(k)k+w= zFk(k,1)+zFn(kt,1)=zf(k)./ Exercise 57 Let f(k)=F(k,1), assume inelastic labor supply normalized to one. Assume that both F(k,n) and (i,k) are linearly homogeneous in their arguments, and amend the profit function to =zf(kt)wtpt(it+(it,kt)). Show that under the stated assumptions the average and marginal q are equivalent./Hint: Notice that wt=zFn(kt,1). Moreover, since F is homogeneous of degree one, we have zf(k)k+w= zFk(k,1)+zFn(kt,1)=zf(k)./