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Calculating the price elasticity of supply
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- Alyssa is a university student who lives in Vancouver and does some consulting work for extra cash. At a wage of $40 per hour, she is willing to work 7 hours per week. At $50 per hour, she is willing to work 10 hours per week. Using the midpoint method, the elasticity of Alyssa's labour supply between the wages of $40 and $50 per hour is approximately which means that Alyssa's supply of labour within this wage range isA company has 350 employees who work 120 hours a month each. Each worker earns $21 per hour. There is a profitable project the company would like to start, but it would require an additional 21,000 working hours within three months to be completed, and all the employees are fully loaded with other projects. The company does not want to hire new staff; they would like the project to be completed by the current workforce instead.Given that the wage elasticity of labor supply is 0.8, calculate the hourly wage the company should offer its employees to encourage them to work on the new project. Use the midpoint method and round to two decimal places throughout your calculations.Paolo is a college student who lives in Chicago and provides math tutoring for extra cash. At a wage of $50 per hour, he is willing to tutor 7 hours per week. At $65 per hour, he is willing to tutor 10 hours per week. Using the midpoint method, the elasticity of Paolo’s labor supply between the wages of $50 and $65 per hour is approximately ........................(0.09/0.74/1.35/42.5), which means that Paolo’s supply of labor over this wage range is ..........................(elastic/inelastic).
- Consider the following equation Q = f(K, L) = K0.7 L0.3 Find (d) Equation representing an isoquant and show that it is convex to the origin (e) Elasticity of substitution (f) Output elasticities of factorsYou are the manager of medium-sized company that deals in production of make-ups in Ghana. Suppose one morning you heard on the news that the government has imposed a lump sum tax on every unit of make-up sold in the market. In addition, suppose during the same period, the price of a leading substitute product decreases along with the change the effect of the tax mentioned above, how would you expect the equilibrium price and quantity of make-up to change assuming the effect of the lump sum tax is larger? [Illustrate by using a graph].Derive the elasticity of substitution for the Cobb-Douglas production Fonction. f(L,K) = ALαKβ
- How much is the marginal revenue of the product of labor if the price of the product (P) is $ 12 and the marginal product of labor (MPL) is 8?Response option group a) $ 12 b) $ 96 c) $ 450 d) $ 384(a) For the cost function C(w1, w2, y) = 2y²w} w, calculate the Allen elasticity of substitution between the two inputs at the cost-minimizing input point (xf(w1, w2, y), a(w1, w2, y)). (b) Consider the production function f(r, y, z) = Vry + rz+ yz. Find the scale elasticity SE at (x, y, z) = (1,2, 3), (5, 1,6), (6, 6, 6) and determine if the pro- duction function is IRTS, CRTS, or DRTS locally at each point. (c) A profit maximizing firm in the market operates where the production exhibits decreasing return to scale (DRTS). Is this market in its long-run equilibrium? Justify your answer. (d) Suppose that there are the infinite number of potential firms that produce the identical output good y under the cost function C(y) = + 3. Assume free entry and exit. Find the long-run equilibrium output price p, the amount of the output that each firm in the market produces in the long-run equilibrium, and the value of profit that each firm earns in the equilibrium.a)The technical rate of substitution between factors X2 and X1 is 4. If you desire to produce the same amount of output but cut your use of X1 by 3 Units, how many more units of X2 unit will you need. b) Why will a monoponist undeemploy and underpay its workers compared to a perfectly competitive firm. c) Explain what happens to the marginal Factor cost of hiring a worker faced by the Monoponist when the elasticity of the supply Curve is infinitely large.
- RrrA competitive firm’s production function is given by y= f(x1,x2)= 4x11/2 + 10x21/2 a) The price of factor 1 is 1, the price of factor 2 is 1, and the price of output is 2. Find the profit-maximizing quantities of x1 and x2? What is the profit-maximizing quantity of output? b) Redo part (a), this time by first deriving the firm’s factor demand functions and the supply function, and then substituting the prices in these functions.(b) Identify the wage-rental ratio in a diagram with k on the horizontal axis and y and W(k) on the vertical axis. (c) The elasticity of substitution in production is defined as: FLFK OKL = F(K,L)FLK dk w Show that the elasticity of the (w) function, defined as is equal to oKL: dw k