Question: Could you explain this problem by letter, plz separate them through letter a,b,c,d and e Thnxx Exercise 1 Consider the following one-period model. Suppose that

Could you explain this problem by letter, plz separate them through letter a,b,c,d and e Thnxx

Could you explain this problem by letter, plz separate them through letter

Exercise 1 Consider the following one-period model. Suppose that Cookie Monster's production function is given by Y = 2vKNd with z = 16 and K = 1. Suppose also that w = 1. (a) Write his profit maximization problem, find optimal labor demand Nd* and compute the maximized profit 7. (b) Suppose that Cookie Monster's utility function is given by u(c, () = c + 4VI + 2. Given w and 7 found in part (a), h = 16 and G = T = 2, write his utility maxi- mization problem and find his optimal consumption bundle c* and (". (c) Write the production possibility frontier as a function of 1. (d) Would the labor market clear with the labor demand and supply found in parts (a) and (b)? Justify. If not, is w too high or too low? In which direction does the labor market push w? (e) Compute the equilibrium (Hint: You may start from labor market clearing condition then find numerical values for w, Nd, Ns, Y, l, 4, C)

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