B. Competitive Factor Markets The production uses Cobb-Douglass technology, F(K, Li) = KL-4; a< 1, and...
B. Competitive Factor Markets The production uses Cobb-Douglass technology, F (Ke, L) = K L-a; a< 1, and thus output per capita is given by f (he) = km where he = K/L Competitive factor markets imply that the wage rate is W = F (KL) = f(kit) - kif'(k): Household asset, A., consists of capital stock, Ke, and government bonds, Be. Since riskless bonds are in zero net supply, in the aggregate B = 0. Thus market cleaning implies...
For a production function F(KL) = K-L2 and factor prices wK-2 and WL-3 Assume that K equals 27 units in the short run a. Derive the long run optimum bundle of inputs if the quantity of output is q-25-32. b. Derive the long run cost function of a firm with this technology. c. Derive the short run cost function of a firm with this technology. For a production function F(KL) = K-L2 and factor prices wK-2 and WL-3 Assume that...