ECON 2202 Lecture 7: Ch2.1-2 the representative firm's problem
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2.1 The consumer's problem
Faces budget constrain
The optimal point
The value of the slope of budget line: wage
MRS = Marginal Utility l / Marginal Utility c = w
Marginal Utility L: the first order derivative of the
utility function with respect to the choice of leisure.
2.2 the representative firm's problem
Assume firm use capital K and labor Nd to produce
All wages and profits are in real terms.
The profits the firm makes is the distributed to
consumers as dividends.
The production function
Nd: labor demanded (Why we carry d with labor N?
the labor demanded.)
Thursday, September 20, 2018