7 - f(E,K) = E ½ K ½ , If the current capital stock is...

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ECO& 4616 In-Class Exercises &AME: Prof. Francisca Antman Exercise 7—Labor Demand (Borjas 4-10) Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is constant at $50 per unit. The production function is
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Unformatted text preview: f(E,K) = E ½ K ½ , If the current capital stock is fixed at 1,600 units, how much labor should the firm employ in the short run? (Hint: First find the MP E .) How much profit will the firm earn?...
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This note was uploaded on 12/06/2010 for the course ECON 4616 taught by Professor Antman during the Fall '08 term at Colorado.

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