Problem
Suppose that Robinson Crusoe regards employment and goods as perfect substitutes on the demand side, and produces with a decreasing returns technology.
(a) Does the Crusoe economy have a competitive equilibrium?
(b) Illustrate the process whereby the Walrasian auctioneer adjusts real wages in order to find it.
(c) Draw the excess demand functions for the goods and labour markets.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.