Sam attend the university? Prove your answer 2. Consider a one-good economy with 100 identical consumers and 200 identic

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Sam Attend The University Prove Your Answer 2 Consider A One Good Economy With 100 Identical Consumers And 200 Identic 1 (34.4 KiB) Viewed 36 times

Sam attend the university? Prove your answer 2. Consider a one-good economy with 100 identical consumers and 200 identical firms. Each consumer is endowed with one unit of time and one piece of land. The agent can spend time either working or enjoying leisure. A representative consumer's utility function is u(a,r) Vary, where is consumption of goods and ris leisure. Each firm hires consumers to work and rents Innd from consumers to produce goods: y f(L,D) VLD, where L is the amount of labor hired and D is the amount of land rented. Both consumers and firms take goods price p, wage rate w and rent rate a as given. Normalize p = 1. (a) Set up a representative consumer's utility-maximization problem. De- rive the Marshallian demands (w,9) and r(u,9). (b) Set up a representative firm's profit-maximization problem. Write down the first-order conditions regarding the choices of L and D.