For the shadow-wage-rate model, let p = 1, p = 2, a = 100, a =...

   

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For the shadow-wage-rate model, let p₁ = 1, p₂ = 2, a₁ = 100, a₂ = 50, P2 b = 0.5, and Lº= 1000. Calculate the optimal labor allocations, outputs, and the shadow wage rate. Write out the value function and confirm the results for the derivatives of this function numerically. For the shadow-wage-rate model, let p₁ = 1, p₂ = 2, a₁ = 100, a₂ = 50, P2 b = 0.5, and Lº= 1000. Calculate the optimal labor allocations, outputs, and the shadow wage rate. Write out the value function and confirm the results for the derivatives of this function numerically.

Answer rating: 100% (QA)

The shadow wage rate is w b L p1 a1 p2 a2 w b L 1 100 2 50 w b L 150 w 05 100... View the full answer