What is the efficent allocation of labor in the economy

Reference no: EM13236733

Imagine an economy where a state-owned enterprise exists alongside a private firm that produces the same good. The private firm has a TEP level that is three times as high as the SOE: Ap = 3x As x the production functions are Yp=Ap x Np and Ys=As x Ns, where Np+Ns=1. The SOE employs three quarters of the work (Ns=3/4).

What is the efficent allocation of labor in this economy?

Reference no: EM13236733

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