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Q. Representative consumers have the utility function U(C,Ls) = ln(C) + ln(1- Ls)Representative consumers have labor endowment of 1. So Ls must be less than 1Representative firm's production function is Y(Ld )=4 LdThere is perfect competition in the markets (so price and wages are taken as given byfirms and consumers)a) Write down profit function of the firmb) Solve for the firms maximization problem and find the labor demandc) Write down the budget constraint of the representative consumerd) Write down the maximization problem of the representative consumer and findlabor supplye) Write down the market clearing conditionsf) Solve for equilibrium labor supply and labor demandg) Solve for equilibrium goods demanded and goods suppliedh) Solve for equilibrium price and wage
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