Labor Market and Real Output: In the labor market, there is one representative worker and a representative firm. Worker supply hours of working (NS), and firm demand hours of work in order to produce output (Y). The production function that capture firm's production process is Y = f(N) = z√KN, where in the short run z=2 and K=100. Worker has a natural log utility function U(c, l) = In(c) + In(l). h=10, T T = 10. Please draw labor supply and labor demand in a graph and determine the equilibrium w*, N*, and Y*. If you cannot solve w*, N*, and Y*, you can just show where they are in the graph. (Note: MRS,c=and MPN: 2√N = Now, TFP (z) increases. What happen to the equilbirium outcomes (w*, N*, and Y*)? Please show it in an another graph. Are the changes the same as the example that we discussed in the class?
Labor Market and Real Output: In the labor market, there is one representative worker and a representative firm. Worker supply hours of working (NS), and firm demand hours of work in order to produce output (Y). The production function that capture firm's production process is Y = f(N) = z√KN, where in the short run z=2 and K=100. Worker has a natural log utility function U(c, l) = In(c) + In(l). h=10, T T = 10. Please draw labor supply and labor demand in a graph and determine the equilibrium w*, N*, and Y*. If you cannot solve w*, N*, and Y*, you can just show where they are in the graph. (Note: MRS,c=and MPN: 2√N = Now, TFP (z) increases. What happen to the equilbirium outcomes (w*, N*, and Y*)? Please show it in an another graph. Are the changes the same as the example that we discussed in the class?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Labor Market and Real Output:
In the labor market, there is one representative worker and a representative firm. Worker supply
hours of working (NS), and firm demand hours of work in order to produce output (Y). The
production function that capture firm's production process is Y = f(N) = z√KN, where in the
short run z=2 and K=100. Worker has a natural log utility function U(c, l) = In(c) + In(l).
h=10, T T = 10. Please draw labor supply and labor demand in a graph and determine the
equilibrium w*, N*, and Y*. If you cannot solve w*, N*, and Y*, you can just show where they
are in the graph. (Note: MRS,c=and MPN:
2√N
=
Now, TFP (z) increases. What happen to the equilbirium outcomes (w*, N*, and Y*)? Please
show it in an another graph. Are the changes the same as the example that we discussed in the
class?
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