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Unformatted text preview: York University Department of Economics Professor Ahmet Akyol AS/ECON 2400 - INTERMEDIATE MACROECONOMIC THEORY I Deferred Final Exam, Summer 2010. Duration 2 hours 1.-35 points- Consider the representative consumer with preferences over the consump- tion good, c , and leisure, l described by the utility function U ( c,l ) = ln c + ln l (1) She is endowed with h hours of time. She faces a wage rate, w , measured in consump- tion units per hour, in the labour market. She receives dividend income from the firm. In addition, she faces a labor income tax rate of t . In other words, for each w she earns, she pays tw to the government. The representative firm has a technology that converts labour hours to output: Y = zN d (2) where z is the exogenous total factor productivity, and N d is the hours of labour employed by the firm. The firm faces a wage rate w in the labor market. (a) Solve the firms profit maximization problem. Calculate the firms demand for labour, and the profit. Graph the firms labour demand function.labour, and the profit....
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- Summer '09