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Unformatted text preview: < < 1 . Problem 3 Derive demand function of intermediate good from the &nal good producing &rm prob-lem. There are continuum of monopolists in intermediate good sector and each &rm has Cobb-Douglas production technology that use labor and capital as inputs. Let the input price be t and w t for capital and labor respectively. 1 Problem 4 Formulate the intermediate &rms problem and solve. (hint : take lagragian multi-plier as industry wide, i.e. not &rm speci&c, so that the solution yields the symmetric equilibrium conditions for all intermediate &rm) Problem 5 What is the intermediate &rms pro&t? Problem 6 Write three equilbrium conditions from research sector. Problem 7 Summarize equilibrium conditions including aggregation(Depreciation rate of capital is & ) Problem 8 Solve Social Planners problem and compare Euler equation with Competitive Equilib-rium Problem 9 Now suppose = 1 what happens to CE and SP? 2...
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