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Consider the following information about the model economy U(c,l) = log(c) + log(l) Ns=1-l F(K, N)=2K0.5N0.5...

  1. Consider the following information about the model economy

U(c,l) = log(c) + log(l)

Ns=1-l

F(K, N)=2K0.5N0.5

N=labor l=leisure K=capital

1. Suppose further that there are no taxes. What is the optimality condition between the choices of consumption and labor supply?

2. what is the marginal product of labor?

3. what is the optimality condition for the firm?

4. what is the labor demand function for the firm?

5. what is the supply of consumption good in terms of the wage rate?

6. what is the profit of the firm in terms of the wage rate?

7. what is the labor supply in terms of the wage rate?

8. what is the equilibrium wage rate?

9. what is the equilibrium labor supply?

10.what is the equilibrium level of consumption?

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Answer #1

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