5. Consider the following model of a competitive labour market where both firmsand workers have perfect foresight and symmetric information about the pricelevel (that is, no misperceptions). Firms' technology is given by the productionfunctiony=aN ¹/2(production function)where a is a positive constant representing total productivity, N is employmentand the elasticity of production to employed labour is 1/2.The government requires firms to pay pension contributions to the fiscal authority:the contribution is a small fraction x of the wage paid to each employed worker.Therefore, firms profits equalPy-WN-x WNand they are maximized taking the price level P, the nominal wage W, and thepension contribution rate x as given. Labour supply is given by:W = PbNwhere b is a positive constant. Answer all the following questions.a) Derive the labour demand schedule by solving the profit maximizationproblem of firms.b) What are the consequences of pension contributions for potentialemployment, output and real wages? Compare the cases with and withoutcontributions and justify your answers.

Answered: Image /qna-images/answer/64b95b6f-c013-4efd-9ff4-e197cbe60e81.jpg

Answered: 5. Consider the following model of a…

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 23EQ: 23. Consider a simple economy with just two industries: farming and manufacturing. Farming consumes...

See similar textbooks

Similar questions

23. Consider a simple economy with just two industries: farming and manufacturing. Farming consumes 1/2 of the food and 1/3 of the manufactured goods. Manufacturing consumes 1/2 of the food and 2/3 of the manufactured goods. Assuming the economy is closed and in equilibrium, find the relative outputs of the farming and manufacturing industries.
Agnes, a General Manager in XXX Company, estimated a multiplicative demand function of the form: using a cross-section data collected in the company sales on 30th June, 2019. The estimation results are as follows: (SEE IMAGE) Write down the estimated demand equation Interpret the coefficients and R2 value Describe any three managerial decisions that can be applied by the manager from the estimated demand function
Suppose the demand functions facing a wireless telephone monopolist are Q£ = 80 – 200P for each low-demand consumer and Q% = 200 – 200P for each high-demand consumer, where PIs the per-minute price in dollars. The marginal cost is $0.15 per minute. Suppose the monopolist offers a menu of two-part tariff plans, with one plan Intended for each type of consumer. Suppose too that for any per- minute price P, In the low-demand plan, the fixed fee in the low-demand plan leaves a low-demand consumer with zero surplus; that the number of minutes in the low-demand plan is capped at the number of minutes desired by a low-demand consumer at that plan's per-minute price; and that the high-demand plan has a per-minute price of $0.15 per minute and a fixed fee that leaves the high- demand consumer approximately Indifferent between the low- and high-demand plans. Suppose that there are 100 high-demand consumers and 400 low-demand consumers. Will the monopolist's profit be higher when the per-minute…
1. Benefit Cost analysis.Assume a benefit function B = 60*x^.8 and a cost function C = 4 + 7*x^1.5. The maximum difference between B and C are the net benefits. a) Find the value of x that results in the maximum net benefits. b) Would an increase in the fixed cost of 4 affect the value of x? c) Use a Lagrangian model to find the value of the shadow price, or Lagrangian multiplier, if x cannot exceed 5. What does the multiplier signify?
11. Suppose life expectancy in years (L) is a function of two inputs, health expenditures (H) and nutrition expenditures (N) in hundreds of dollars per year. The production function is L = a. Beginning with a health input of $400 per year (H = 4) and a nutrition input of $4900 per year (N = 49), show that the marginal product of health expenditures and the marginal product of nutrition expenditures are both decreasing. b. Does this production function exhibit increasing, decreasing, or constant returns to scale? c. Suppose that in a country suffering from famine, N is fixed at 2 and that c = 20. Plot the production function for life expectancy as a function of health expenditures, with L on the vertical axis and H on the horizontal axis. %3D %3D d. Now suppose another nation provides food aid to the country suffering from famine so that N in- creases to 4. Plot the new production function. e. Now suppose that N = 4 and H = 2. You run a charity that can provide either food aid or health…
Nyameye Company Limited is a new business established to produce blocks (in units). The demand function for blocks is given as 4Q = 35 -0.5P. It has been estimated that the total fixed cost is GHØ80 and average variable cost function is 30 - 51 + 220, where Q is number of blocks produced and P is the price per block (in GH¢). Given this information, what is the total profit at the profit maximizing level of output, and what is the best pricing policy option?
1) A small company has the marketing information that 35 units will sell daily at a price of $34.75 per unit, and that sales will rise to 36 units per day at a price of $33.06 per unit. Use this information to create a linear demand function, then create the associated revenue 6- function and find the price that will yield the maximum revenue.
19
Consider a rectangle in the xy-plane, with corners at (0, 0), (a, 0), (0, b), and (a, b). If (a, b) lies on the graph of the equation y = 30 - x, find a and b such that the area of the rectangle is maximized. What economic interpretations can be given to your answer if the equation y = 30 - x represents a demand curve and y is the price corresponding to the demand x?
16.
6.
2) A production function for a business follows the model P(L, K) = 0.1 L0.4K0.6 over the course of one year, where P represents the total value of all products the company makes, L represents the value of the labor from employees, and K represents the value of all the company's assets (buildings, machines, etc.), where everything is measured in millions of dollars. ap a. Find and ƏL ap ак' , and explain what they represent in this context. b. Evaluate the partial derivatives from part a when (L, K) = (3,4). If this was your business and your values, if you wanted to expand would it be better to expand in workforce (increase L) or expand in assets (increase K)?

SEE MORE QUESTIONS

Recommended textbooks for you

Linear Algebra: A Modern Introduction

Algebra

ISBN:

9781285463247

Author:

David Poole

Publisher:

Cengage Learning

Algebra & Trigonometry with Analytic Geometry

Algebra

ISBN:

9781133382119

Author:

Swokowski

Publisher:

Cengage

Linear Algebra: A Modern Introduction

Algebra

ISBN:

9781285463247

Author:

David Poole

Publisher:

Cengage Learning

Algebra & Trigonometry with Analytic Geometry

Algebra

ISBN:

9781133382119

Author:

Swokowski

Publisher:

Cengage

SEE MORE TEXTBOOKS