A firm has a productivity equation is labour and K is capital. K² where L The unit cost (cost for each unit of production) is c = 2. The price in the market for the good is 15. The wage for each hour is w=10. Also, there is a fix cost equal to K Furthermore, there is a worker with utility equation. U = C² R where C is the consumption and the price of consumption good is P. = 1. The maximum working hours (T) per week are 100. So, T = L + R where R is the leisure time. с Calculate the optimum decision for working hours, leisure time and consumption by the consumer. Then calculate the capital investment by the firm for the maximisation of the profits. (Hind: This is the only worker for the firm and he will decide for the working hours, so the firm will decide for the capital. Assume that L = Q)

A firm has a productivity equation is labour and K is capital. K² where L The unit cost (cost for each unit of production) is c = 2. The price in the market for the good is 15. The wage for each hour is w=10. Also, there is a fix cost equal to K Furthermore, there is a worker with utility equation. U = C² R where C is the consumption and the price of consumption good is P. = 1. The maximum working hours (T) per week are 100. So, T = L + R where R is the leisure time. с Calculate the optimum decision for working hours, leisure time and consumption by the consumer. Then calculate the capital investment by the firm for the maximisation of the profits. (Hind: This is the only worker for the firm and he will decide for the working hours, so the firm will decide for the capital. Assume that L = Q)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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