Use comparative static analysis
Course:- Business Economics
Reference No.:- EM131391851

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Suppose the firm's profit maximization problem is to choose the labor input N so at to maximize: π = zF(K,N) – wN, where the firm's production technology is given by Y = zF(K, N) = zK^α*N*(1-α) , and 0 < α < 1. Use comparative static analysis (and implicit differentiation) to generate the expression and appropriate sign of: dN/dz.

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