ECON 412

ECON 412 - Penn State University Labor Economics and Labor Markets Homework 2 Ewout Verriest Fall 2020 Problem 1 Consider a firm which produces according to the following production function: q = A( √ E + √ K) where q denotes output, E denotes the number of workers hired by the firm, K denotes capital, and A > 0 is a technology parameter. The marginal product of labor is therefore given by MPE = A 2 √ E . In the short run, the firm rents 100 units of capital, at a ren...