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The representative firm maximizes profits by choosing the optimal labor input N d , its production function displays constant returns to scale. Suppose that the
The representative firm maximizes profits by choosing the optimal labor input N d , its production function displays constant returns to scale. Suppose that the marginal product of labor is given by MPn = bz(N^d )^b1 , in which 0 < b < 1 and capital K has been set to one. The firm takes as given the real wage rate w. Solve for the firm's optimal choice of N^d .
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