Suppose that the production function is Y =
99
K Superscript 0.5N Superscript 0.5.
With this production function, the marginal product of labor is MPN =
4.54.5
K Superscript 0.5/
N Superscript 0.5.
The labor supply curve is NS =
105105times×[(1
minus−
t)times×w
] Superscript 2,
where w is the real wage rate, t is the tax rate on labor income, and hence (1
minus−
t)times×w
is the after-tax real wage rate.
The capital stock is K =
2525.
Assume that the tax rate on labor income,
t,
equals zero.
Which of the following equations represents the labor demand curve?