Re: ISI PEB Q4

Posted by L on Apr 15, 2015; 9:19am
URL: http://discussion-forum.276.s1.nabble.com/ISI-PEB-Q4-tp7596196p7596197.html

N1 + N2 = 10 ........N1- Labor in X, N2 - Labor in Y
Now, X and Y are produced by identical technologies and if N1 are in sector X,

So, X = 2N1  
Y = 2N2 as one unit of labor can produce one unit each of X and Y.

Profits = P1 N1 + P2 N2 - W (N1+ N2)

Total Profits will be zero due to competitive markets.

And P1 X + P2 Y = 100
P1 N1 + P2 N2 = 50

So, Profits = 0
=> w*10 = 50
W = 5