Labor Market and Real Output:In the labor market, there is one representative worker and a representative firm. Worker supplyhours of working (NS), and firm demand hours of work in order to produce output (Y). Theproduction function that capture firm's production process is Y = f(N) = z√KN, where in theshort run z=2 and K=100. Worker has a natural log utility function U(c, l) = In(c) + In(l).h=10, T T = 10. Please draw labor supply and labor demand in a graph and determine theequilibrium w*, N*, and Y*. If you cannot solve w*, N*, and Y*, you can just show where theyare in the graph. (Note: MRS,c=and MPN:2√N=Now, TFP (z) increases. What happen to the equilbirium outcomes (w*, N*, and Y*)? Pleaseshow it in an another graph. Are the changes the same as the example that we discussed in theclass?

Answered: Image /qna-images/answer/2d74f174-386e-4dfd-a1db-dc08120d4cad.jpg

Answered: Labor Market and Real Output: In the…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter29: Resource Markets

Section: Chapter Questions

Problem 3E

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