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The processing of Q online orders can be done using hours of robot time (denoted by K) and hours of human time (denoted L). The processing of Q = 48 online orders requires either 4 hours of robot time (L = 0 and K = 4) or 8 hours of human time (L = 8 and K = 0). Hours of robot time and hours of human time are perfect substitutes; for example, the processing of Q = 48 online orders could also be done using K = 3 hours of robot time and L = 2 hours of human time.
(a) Determine 4 points on the Q = 96 isoquant.
(b) Write out the equation for the production function Q (L, K).
(c) Determine the labor and capital demand in terms of Q0, w and r.
(d) Determine the total cost in terms of Q0, w and r.
Symmetric Equilibrium Suppose that QU1 = QU2 = QE1 = QE2 = 10. Calculate the equilibrium world interest rate, and the current accounts in the United States and Europe in period
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