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Labor Economics 5th Edition by George Borjas
Edition 5ISBN: 978-0073511368Labor Economics 5th Edition by George Borjas
Edition 5ISBN: 978-0073511368 Exercise 9
Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is constant at $50 per unit. The production function is
f(E,K) = E ½ K ½ ,
so that the marginal product of labor is
MP E = (½)(K/E) ½.
If the current capital stock is fixed at 1,600 units, how much labor should the firm employ in the short run How much profit will the firm earn
f(E,K) = E ½ K ½ ,
so that the marginal product of labor is
MP E = (½)(K/E) ½.
If the current capital stock is fixed at 1,600 units, how much labor should the firm employ in the short run How much profit will the firm earn
Explanation
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Given,
Hourly wage (w) = $10
Price of c...
Labor Economics 5th Edition by George Borjas
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