The Company «One Factor» Is Labor (N) Only Variable Input Factor, While Real Capital Is Fixed. The Product Function Is Thus Given By. The Company Aims To Maximize Profits. (A) What Does The Product Function Show?Assume Now That The Product Function Is Given By, Where A> 0 Shows The Productivity Of The Labor Force. The Salary Is Given By W, And The Product
the company «one factor» is labor (N) only variable input factor, while real capital is fixed. The product function is thus given by. The company aims to maximize profits.
(a) What does the product function show?
Assume now that the product function is given by, where A> 0 shows the productivity of the labor force. The salary is given by w, and the product price P = 1.
(b) Optimal adaptation is there. What will be the company's factor demand function?
(c) How will increased productivity (A) affect the demand for labor?
(d) Assume that A = 10 and w = 5. What will be the demand for labor?
(e) Calculate the company's profits.