Find real wage-employment-output and unemployment

Reference no: EM13223213

Consider an economy where, consumer's utility function is given as U(C,L)=C-(1/2)L2 . where C is consumption and L is labor. The production technology is Y=(1.6)L-(1/2)L2. The turnover cost per labor is (0.36)/(w/p)

(a) What happens to t as real wage increases? Give a clear intuition

(b) What happens to t as labor increases? Give a clear intuition

(d) Write down consumer maximization problem and solve it. Derive labor supply curve

(e) Find real wage, employment, output and unemployment in this economy.

Reference no: EM13223213

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