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Consider the following production function: Y = A ̄K2 L1 , where Y is production, A...

Consider the following production function: Y = A ̄K2 L1 , where Y is production, A ̄ is productivity, K is capital, and L is labor. Let w denote the wage rate and r denote the rental rate of capital. 21 Suppose you solve the profit maximization problem of the firm: max A ̄K L wL rK. What is K,L the expression for wL ? Y (a) wL =1↵. Y (b) wL =↵. Y (c) wL = 1. Y3 (d) wL = 2. Y3 (e) None of the above.

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