Re: DSE 2014 Macro Question

Posted by throwaway on Jun 19, 2015; 4:14am
URL: http://discussion-forum.276.s1.nabble.com/DSE-2014-Macro-Question-tp7598060p7598082.html

Think of it this way : supposing w_t was given as 4, and δ was given as 2. What would you get the labour supply as, if you used the setting derivative = 0 method? It would exceed 1 - which is why you need to consider two cases. a) when w_t is less than delta (normal method) and b) when w_t is more than delta, in which case you would provide as much labour as possible, which is 1.