A competitive equilibirum problem.
A) Suppose that Cookie Monster’s production function is given by
zF (K, Nd) = z(K Nd)1/2
with z = 16 and K = 1/16 .
Suppose also that w = 1. Write his profit maximization problem, find Nd* and compute the maximized profit
B) Suppose that Cookie Monster’s utility function is given by
u(C, l) = C + 4(L + 2)1/2.
Given w and π∗ found in item h = 16 and G = 2,
Write his utility maximization problem, find his optimal consumption bundle, and compute the maximized utility level