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August 28, 2015

Homework Help: econ

Posted by jon on Wednesday, October 17, 2007 at 11:02pm.

Suppose that the economy consists of two types of firms: type A firms which produce output using a technology Qa=Min(1/3K,L) and type B firms which produce output using a technology Qb=Min(1/2K,L). Type A output sells for $1.00, and type B sells for $.50. Assuming that both firms earn zero profits, what is the wage rate and the rate of return to capital?

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