Question

Suppose a firm optimizes the two period profit function: Y-wN+Y*-w*N* /1+r where current labor N, and...

Suppose a firm optimizes the two period profit function: Y-wN+Y*-w*N* /1+r where current labor N, and future labor N* are the only inputs. The production function in the current period is Y=zF(N) The production function in the future period is Y*=z*F(N*) a) What is the sign of the derivative dN/dw (positive/negative/indeterminate)? b) What is the sign of the derivative dN/dz (positive/negative/indeterminate)? c) What is the profit maximizing firt-order condition with respect to future labor N? d). What is the total differential of this first-order condition? e) What is the expression for the derivative dN*/dw* ? f) What is the expression for the derivative dN*/dr? g) What is the sign of the derivative dN*/dw* (positive/negative/indeterminate)? f) What is the sign of the derivative dN*/dz* (positive/negative/indeterminate)?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2. Suppose a firm optimizes the two period profit function: Y - wN + [(Y'-w'N')/(1+r)] where...
2. Suppose a firm optimizes the two period profit function: Y - wN + [(Y'-w'N')/(1+r)] where current labor N, and future labor N’ are the only inputs. The production function in the current period is Y = zF(N) The production function in the future period is Y’ = z’F(N’) a) What is the profit maximizing first-order condition with respect to current labor N? b) What is the total differential of this first-order condition? c) What is the expression for the...
Let the period 1 profit of a firm be as follows: F(K₁) - I₁ - (a/2)...
Let the period 1 profit of a firm be as follows: F(K₁) - I₁ - (a/2) [(I₁)^2/ (K₁)] where a>0 . We omit labor for simplicity. Profit in future periods is defined analogously. Assume no depreciation for simplicity, so that K₂ = K₁ + I₁ and so on. a)Assume that the firm maximizes the discounted present value of its current and future profits. Derive the first-order necessary conditions for K₂. b) Recast this optimality condition in terms of q, where...
There is a firm that produces using the production function Y=A N - N2, where Y...
There is a firm that produces using the production function Y=A N - N2, where Y is output, A is productivity, and N is employment. Firms hire workers until the marginal product of labor is equal to the wage rate, w. The supply of labor is Ns=0.5 w. Starting from A=2, the economy is hit by a negative productivity shock that decreases A by 2% (A changes from 2 to 1.96). What is the percentage change in employment induced by...
An economy has the production function Y = 0.4 (K + N1/4) In current period K=100...
An economy has the production function Y = 0.4 (K + N1/4) In current period K=100 and N=100. a. Graph the relationship between output and capital, holding labor constant at its current value. What is the MPK? Does the marginal productivity of capital diminish? (Use your Excel skills.) b. Graph the relationship between output and labor, holding capital constant at its current value. Find the MPN for an increase of labor from 100 to 110. Compare this result with the...
1. A firm production function is given by q(l,k) = l0.5·k0.5, where q is number of...
1. A firm production function is given by q(l,k) = l0.5·k0.5, where q is number of units of output produced, l the number of units of labor input used and k the number of units of capital input used. This firm profit function is π = p·q(l,k) – w·l – v·k, where p is the price of output, w the wage rate of labor and v the rental rate of capital. In the short-run, k = 100. This firm hires...
1.    In a multiple regression model, the following coefficients were obtained: b0 = -10      b1 =...
1.    In a multiple regression model, the following coefficients were obtained: b0 = -10      b1 = 4.5     b2 = -6.0 a.    Write the equation of the estimated multiple regression model. (3 pts) b     Suppose a sample of 25 observations produces this result, SSE = 480. What is the estimated standard error of the estimate? (5 pts) 2.    Consider the following estimated sample regression equation: Y = 12 + 6X1 -- 3 X2 Determine which of the following statements are true,...
1. The failure of the new supply chain system affected Nike adversely. What were the reasons...
1. The failure of the new supply chain system affected Nike adversely. What were the reasons for the failure and how did the breakdown harm Nike? 2. What are the important elements to be kept in mind while implementing a new system in an organization? What is the importance of a good working relationship between partners and the sharing of responsibility in implementing critical projects? What mistakes did Nike and i2 make? 3. comment on the lessons learned and the...