probset1 - \documentclass[12pt]cfw_article...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
\documentclass[12pt]{article} \ \usepackage{amsmath} \usepackage{geometry} \ \geometry{top=1in,bottom=1in,left=1in,right=1in} \ \setlength{\parindent}{0in} \setlength{\parskip}{2ex} \ \begin{document} \ \begin{center} \begin{tabular*}{6.5in}{l@{\extracolsep{\fill}}r} \multicolumn{2}{c} {\bfseries Problem Set 1 } \\ \multicolumn{2}{c} {Due Thursday, September 17} \end{tabular*} \end{center} \ {\bfseries 1. Profit Maximization} { Consider a firm that produces output $y$ with capital $k$ and labor $l$ according to the technology described by \begin{equation} k^{a}l^{b} \geq y, \tag{1} \end{equation} where $0<a<1$, $0<b<1$, and $0<a+b<1$. The firm sells each unit of output at the price $p$, rents each unit of capital at the rate $r$, and hires each unit of labor at the wage $w$. Hence it chooses $y$, $k$, and $l$ to maximize profits $$ py - rk - wl $$ subject to the constraint just shown in (1). \begin{description}
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/19/2010 for the course ECON 720 taught by Professor Ireland during the Fall '09 term at BC.

Page1 / 2

probset1 - \documentclass[12pt]cfw_article...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online