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QUESTION
Suppose that there are 100 identical firms, each with the following technology: f = K^1/4 * L^1/2. Suppose also that in the short run K = 1, with r =...
(g) If w = 1, nd the optimum of leisure h and consumption x.
Show more (h) Find the individual supply of l (do not assume w = 1).
(i) Find the market supply of labor.
Assume that the amount of labor (hours worked) is traded in a competitive market.
(j) What will be the equilibrium wage rate w*?
(k) What will be the equilibrium level of labor?
