a) According to Adam Smith's Model, the prices of goods depend on the relative value of labour used to produce the goods. Therefore, if it takes 7 hours to produce 35 shirts, and 9 heeirs to produce D socks, then I shirt should trade for how many socks? b) Suppose Caitlan has preferences for Watermelons (W) and Bananas (B) given by: Utility-V3.85 W B Caitlan wishes to generate X utils from the consumption of watermelons and bananas. Let X - A+2C+30. Suppose she can only buy bananas in sets of 5, 10, 15 or 22 units. How many units of watermelons should she consume in each case to ensure that she does not change her desired utility level? c) Suppose that the supply curve for the labour to a firm is given by L-X*w and the marginal expense of labour curve is given by MEL - L (X/2) where w is the market wage. Suppose also that the firm's demand for labour (marginal revenue product) curve is given by L-Y-X*MRPL Let X-D and let Y- 500 + B. i) If the firm acts as a monopsonist, how many workers will it hire in order to marimire profits? ii) What wage will it pay?

a) According to Adam Smith's Model, the prices of goods depend on the relative value of labour used to produce the goods. Therefore, if it takes 7 hours to produce 35 shirts, and 9 heeirs to produce D socks, then I shirt should trade for how many socks? b) Suppose Caitlan has preferences for Watermelons (W) and Bananas (B) given by: Utility-V3.85 W B Caitlan wishes to generate X utils from the consumption of watermelons and bananas. Let X - A+2C+30. Suppose she can only buy bananas in sets of 5, 10, 15 or 22 units. How many units of watermelons should she consume in each case to ensure that she does not change her desired utility level? c) Suppose that the supply curve for the labour to a firm is given by L-Xw and the marginal expense of labour curve is given by MEL - L (X/2) where w is the market wage. Suppose also that the firm's demand for labour (marginal revenue product) curve is given by L-Y-XMRPL Let X-D and let Y- 500 + B. i) If the firm acts as a monopsonist, how many workers will it hire in order to marimire profits? ii) What wage will it pay?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1. Suppose you are considering to make a decent holiday dinner. In this year, to be creative, you are thinking to put Copper River Salmon from Alaska (fillet) and fresh Atlantic Lobsters from Maine as entrée on the table. Use the information given, to finish the questions below. (1) The table following provides you total utility (U) and marginal (MU) from consuming Salmon and Lobster. Suppose your total utility of Salmon consumption (U1) is a function of the units (Q as pound or lbs.) of salmon consumed, as U1 =. =/400Q. Similarly, your total utility of Lobster (U2) has the form as units (Q as lbs.) of lobster consumed, which is U2 = /36Q + 40. Now fill the empty spots in the table using the information given. Total utility and marginal utility of Salmon and Lobster. Copper River Salmon Atlantic Lobster Q (Ibs.) U1 MU1 U2 MU2 1 20.00 20.00 8.72 8.72 2 3 4. 6. 7 8 10 (2) With a certain amount of budget, you are going to purchase both Salmon and Lobsters. To maximize your total…
The goods in the next question are not ale and bread. To solve this question, you are going to have to evaluate the condition The price p is defined for you, but you will have to define the marginal rate of substitution for yourself. What ratio of marginal utilities should you use? You will know the answer to this question once you have defined the marginal rate of substitution – that is, decided which good is being given up and which good is being given in compensation. When making this decision, remember that both sides of this equation refer to the same kind of trade. The right-hand side describes the rate at which one good can be traded for the other in the marketplace; and the left-hand side describes the rate at which someone is willing to trade that good for the other. Thus, the definition of the price determines the manner in which the marginal rate of substitution must be defined. Pierre lives on red wine and blue cheese. His utility function is. where w is his…
Suppose that a budget constraint intersects anindifference curve at two separate points. Caneither of these consumption bundles be optimal?Explain why or why not.
Is the marginal rate of substitution is another way to mathematically expressing the opportunity for one more unit of a good that is consumed