1.) Using appropriate diagram (s) explain why the competitive wage is the same across a homogenous market. 2.) Using the formular below explain why a firm can only control its demand for labour/employment while trying to maximize profit in the short run. Profits = pq - wE- rK Where p is for price, q is for output, w is for wage rate, E is for number of workers, r is the cost of capital and K is for capital. 3.) State 2 reasons for wage differentials and give a short explanation of each (2 sentences maximum for each of them)

1.) Using appropriate diagram (s) explain why the competitive wage is the same across a homogenous market. 2.) Using the formular below explain why a firm can only control its demand for labour/employment while trying to maximize profit in the short run. Profits = pq - wE- rK Where p is for price, q is for output, w is for wage rate, E is for number of workers, r is the cost of capital and K is for capital. 3.) State 2 reasons for wage differentials and give a short explanation of each (2 sentences maximum for each of them)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ASAP
Q.4 1.) State whether it is True/False and provide an explanation for each. An example or counterexample could be provided too. A.)If the production technology is neither increasing returns to scale nor decreasing returns to scale, then it must be constant returns to scale. B.) In the real-world, marginal cost curve is usually U-shaped. Therefore, in a perfectly competitive market, a firm can maximize profit at two different output levels in the short-run.