The followings are short run production functions for two firms operating in different industries with different capital structures. Find and draw the the Value of Marginal Product for Labor for two firms?Write down the profit maximization problem and derive labor demand curvesfor each firm? What is the employment (for labor) level for firm 1 and firm 2 ? Find the profit level for each firm?Discuss the impact of public infrastructure investment ,and technological advancement on labor productivity and employment levels for each firm ? The followings are short run production functions for two firms operating in differentindustries with different capital structures.F (L) ₁F(L) ₂KVAL== Min{aG, AK₂} + O√ī=K₁, represents the sector-specific capital employed by the firm 1, K₂, represents the sector-specific capital, employed by the firm 2, while L represents the labor employed by the firm.Use ₁,₂ to represent the rental price of capital structures. w to represent the wage oflabor, P₁ is the price of the good produced in the first industry and P₂ is the price of thegood produced in the second industry. Assume that all markets (commodities and factormarkets) are competitive, and labor are mobile across industries. G represents publicinfrastructure investment by the government and A represents the technology level. (Hint:G is fixed in the short run).a) Find and draw the the Value of Marginal Product for Labor for two firms?b) Write down the profit maximization problem and derive labor demand curvesc) for each firm? What is the employment (for labor) level for firm 1 and firm 2 ?d) Find the profit level for each firm?|e) Discuss the impact of public infrastructure investment, and technologicaladvancement on labor productivity and employment levels for each firm ?

Answered: The followings are short run…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 7E

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The followings are short run production functions for two firms operating in different industries with different capital structures.

Find and draw the the Value of Marginal Product for Labor for two firms?
Write down the profit maximization problem and derive labor demand curves
for each firm? What is the employment (for labor) level for firm 1 and firm 2 ?
Find the profit level for each firm?
Discuss the impact of public infrastructure investment ,and technological advancement on labor productivity and employment levels for each firm ?

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Marginal product refers to that additional unit of output produced by employing one more unit of labor .

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