80.2K

Verified Solution

Link Copied!

Consider the one-period closed economy that we've discussed in class, and assume the following information is given about the representative consumer and representative firm:

The representative consumer's preferences over a consumption bundle (C,) is represented by the following log utility function: U(C,)=ln(C)+0.5ln(). The representative consumer has a total of h=5 hours of time that she can allocate between leisure and labour.

The representative firm own K=2 units of physical capital, and hires labour Nd to produce output according to the following production technology: Y=0.5(K)0.3(Nd)0.7.

Firm's profits, denoted by go to the consumer as divident income.

There is no government in this econom

Compute the competitive equilibrium wage rate in this economy.

I need full solutions as there is already an answer

Consider the one-period closed economy that we've discussed in class, and assume the following information is given about the representative consumer and representative firm: - The representative consumer's preferences over a consumption bundle (C,) is represented by the following log utility function: U(C,)=ln(C)+0.5ln(). The representative consumer has a total of h=5 hours of time that she can allocate between leisure and labour. - The representative firm own K=2 units of physical capital, and hires labour Nd to produce output according to the following production technology: Y=0.5(K)0.3(Nd)0.7 - Firm's profits, denoted by go to the consumer as divident income. - There is no government in this economy. Compute the competitive equilibrium wage rate in this economy

Answer & Explanation Solved by verified expert

See Answer