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

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