Consider an economy with production function given by Y = AK0.5L 0.5 where A is the total factor productivity (TFP), K is the capital stock and L is the labor input. For simplicity assume capital is fixed and equal to 1. Assume A=100.

a. Write the firms problem of choosing labor demand. Derive the demand for labor as a function of the real wage.
b. Assume labor supply is inelastic and fixed at L¯ = 25. Find the equilibrium values of the wage and the employment level for this economy. Display graphically the labor supply and the labor demand curves. Carefully label your graph.
c. Suppose the economy faces a positive productivity shock and TFP is now A=150. Display graphically the new labor demand function. What are the equilibrium values of employment and the real wage?
d. Compute the total output when A=100 and when A=150. What is the outputs growth rate? Compare that growth rate with the growth rate in A. How does the growth rate of output per capita compares to the growth rate in A? Explain carefully.

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

Which one of the following statements is true? ddt does not prevent disease from passing from agricultural animals to humans. cost was a major factor in the united states government's decision to ban ddt. many african governments concluded that the potential long-term health effects of ddt were not as serious as the immediate problem of insect control. ddt cannot accumulate in the fat of animals. the ddt ban in the united states has made it very difficult to control agricultural insect pests.

Dollar shave club is an ecommerce start-up that delivers razors to its subscribers by mail. by doing this, dollar shave club is using a(n) to disrupt an existing market. a. innovation ecosystem b. architectural innovation c. business model innovation d. incremental innovation