Consider a firm in a competitive industry with the production technology: Q=L^1/2+K^1/2. The firm faces competitive output and factor markets, with output price P and the unit price of labour w and that of capital r with total costs of C=wL+rK. The market wage rate (w) increases. Predict the impact on the number of workers employed? Be specific.

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Profit TR TC PQ C p K 12 L 12 rK WL We have to maximize profi... View the full answer