The followings are short run production functions for two firms operating in different industries with different...

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The followings are short run production functions for two firms operating in different industries with different capital structures. F(L), = KVAL F(L)₂ = Min{aG, AK₂) + √ K₁, represents the sector-specific capital employed by the firm 1. K, represents the sector-specific capital, employed by the firm 2, while L represents the labor employed by the firm. Use r, . r, to represent the rental price of capital structures. w to represent the wage of labor, P, is the price of the good produced in the first industry and P, is the price of the good produced in the second industry. Assume that all markets (commodities and factor markets) are competitive, and labor are mobile across industries. G represents public infrastructure investment by the government and A represents the technology level. (Hint: G is fixed in the short run). a) Find and draw the the Value of Marginal Product for Labor for two firms? (5 Marks) b) Write down the profit maximization problem and derive labor demand curves for each firm? What is the employment (for labor) level for firm 1 and firm 2? (10 Marks) Find the profit level for each firm? (5 Marks) Discuss the impact of public infrastructure investment and technological advancement on labor productivity and employment levels for each firm? (5 Marks) c) d) The followings are short run production functions for two firms operating in different industries with different capital structures. F(L), = KVAL F(L)₂ = Min{aG, AK₂) + √ K₁, represents the sector-specific capital employed by the firm 1. K, represents the sector-specific capital, employed by the firm 2, while L represents the labor employed by the firm. Use r, . r, to represent the rental price of capital structures. w to represent the wage of labor, P, is the price of the good produced in the first industry and P, is the price of the good produced in the second industry. Assume that all markets (commodities and factor markets) are competitive, and labor are mobile across industries. G represents public infrastructure investment by the government and A represents the technology level. (Hint: G is fixed in the short run). a) Find and draw the the Value of Marginal Product for Labor for two firms? (5 Marks) b) Write down the profit maximization problem and derive labor demand curves for each firm? What is the employment (for labor) level for firm 1 and firm 2? (10 Marks) Find the profit level for each firm? (5 Marks) Discuss the impact of public infrastructure investment and technological advancement on labor productivity and employment levels for each firm? (5 Marks) c) d)

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