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1. If i'm given a firm's production function of

$\displaystyle Y=zK^{\alpha}{N}^{1-\alpha}$

Then assuming $\displaystyle K$ is fixed and cost free, we can get our profit maximzation problem of

$\displaystyle \max_{{N}}zF(K^{\alpha}{N}^{1-\alpha})-wN$

To find the optimality condition, $\displaystyle {MP}_{N}=w$ , I take the partial derivative and find

$\displaystyle z{F}_{N}=z(1-\alpha){K}^{\alpha}{N}^{-\alpha}=w$

Here is where i'm stuck.

I need to show that the optimality condition can be written as $\displaystyle \alpha=1-\frac{wN}{Y}$

Any help would be appreciated.

Thank you,

Gin

2. Originally Posted by Ginnee
If i'm given a firm's production function of

$\displaystyle Y=zK^{\alpha}{N}^{1-\alpha}$

Then assuming $\displaystyle K$ is fixed and cost free, we can get our profit maximzation problem of

$\displaystyle \max_{{N}}zF(K^{\alpha}{N}^{1-\alpha})-wN$

To find the optimality condition, $\displaystyle {MP}_{N}=w$ , I take the partial derivative and find

$\displaystyle z{F}_{N}=z(1-\alpha){K}^{\alpha}{N}^{-\alpha}=w$

Here is where i'm stuck.

I need to show that the optimality condition can be written as $\displaystyle \alpha=1-\frac{wN}{Y}$

Any help would be appreciated.

Thank you,

Gin
Dont get the notation. What is z and F and also F with a subscript N

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