A domestic economy can produce wine or bread using labor with the following technology:Yw = 21Y6 = 0.51Preferences in this economy are Cobb-Douglas and given by:u (Cu, Cb) = 0.2 log cu + 0.8 log csTotal labor endowment in this economy is 1 million workers that are perfectly mobile across sectors.A foreign economy is instead characterized with the following technology:Y = 31%3DThe foreign economy has the same preferences as the domestic, but a labor supply of 10million workers.What is the equilibrium competitive wage rate in units of bread for the home economy under free-trade?3/222/31/2

Technology for the domestic country: yw = 2lw yb = 0.5lb Technology for the foreign country: y*w =…

Answered: A domestic economy can produce wine or…

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

QUESTION THREE: PRODUCER THEORY 1. Suppose the production function for automobiles is given by q = kl - 0.8k² - 0.21² where q represents the annual quantity of bicycles produced, k represents annual capital input, and I represents annual labor input. a) Suppose k=10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many cars are produced at that point? b) Again, assuming k=10, graph the MP curve. At what level of labor input does MP₁ = 0 c) Suppose capital inputs were increased to k-20. How would your answer to parts (a) and (b) change? d) Does the production of automobiles exhibit constant, increasing, or decreasing returns to scale? 2. Supposing that the firm in (1) is a competitive firm and its production function is y = 10 + (x - 1,000)¹/3. The price of the input x is w = 1. (a) Show that the firm's total cost curve is C(y) = 1,000 + (-10)³. (b) Show that the minimum of the marginal cost curve…
Let’s say we extend the the standard 1 person static labor supply problem instead to a family with two people making money. In the family of two money makers, given as person 1 and person 2, the given utility function is u(c1 + c2, l1, l2). Utility is defined as a function of the sum of goods consumed by the two people in the family, and of each person’s leisure time. Each person has a time endowment of “Ti” and gets a wage “wi”, where i = 1, 2. The two person family has a non-labour income defined y (which means this is the income of the family whether or not they work) and face price “p” for consumption goods. How can I utilize the Slutsky equation to show how the labour supply of 2 changes with w1? Thank you!
An economy has 8 units of labor and 8 units of capital that are allocated between industry X, with the DRTS production function x = K^(1/4)L^(1/4), and industry Y, with the CRTS production function y = K^(1/2)L^(1/2). Derive and graph the Production Possibilities Frontier for this economy. All consumers believe X and Y are perfect complements with tastes U = min (Y, 2X). Calculate production levels that are consistent with tastes and show these in your diagram.
Consider the Labor Economics Question. This will provide insight into the idea of the optimal number of workers and the value of the marginal product of labor. If wages in the restaurant is $20.00 per hour and the price of a Hamburger is $8.00 and the production function for the workers is: Q = 11L – 0.25L^2 a. How many workers should Your Restaurant employ during the lunch hour to maximize profits? 1 Point (note—the value of the marginal product of labor and the marginal revenue product are the same) We maximize profits which are total revenues less total costs: b. Compute the maximum profit at Your Restaurant. (note—consider that profit involves Total Revenue and Total Costs). 1 Point c. Compute the profit created if You hire an additional worker. Explain why it is or is not profit maximizing to hire an additional worker. The idea of this question is to recognize that we can find the profit maximizing quantity of labor– after that point, profit begins to…
Consider the Labor Economics Question. This will provide insight into the idea of the optimal number of workers and the value of the marginal product of labor. If wages in the restaurant is $16.80 per hour and the price of a Hamburger is $8.30 and the production function for the workers is: Q = 11L – 0.25L2 How many workers should Your Restaurant employ during the lunch hour to maximize profits? 1 Point (note—the value of the marginal product of labor and the marginal revenue product are the same) We maximize profits which are total revenues less total costs:
Consider the (long run') effects of inward labor migration in the Heckscher- Ohlin Model. Assume that the country trades and the relative price of two goods X and Y stavs constant. Assume X is relatively labor intensive. Intuitively explain how the increase in labor supply affects (relative) output of X and Y and how it affects factor prices ('Rybczynski Theorem'). You may want to use graphs.
Consider a price-taking firm whose production function is given by q=3L1/5 K1/9 where L and K denote respectively the amount of labour and capital the firm uses to produce q units of output. Suppose the price of labour is w = 16, the price of capital is 24 and the price of the firm's output is p=225 . Derive the firm's conditional demand for capital. Then enter below the amount of capital the firm would use to produce 100 units of output at minimum cost.

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS