Question 12Consider a workplace that has two workers who can work as a team. Each worker can put in effort worker 1's effort is labelled el and worker 7's as e2. These effort chores are madesimultaneously. Output of the team is Bel+ 4e2. Each worker bears the cost of their effort and has a utility of Ui-wi-ei, where i-1.2 and wi is the wage that the worker ves Nowassume that the effort of each worker is unobservable but team output can be contracted on. In fact, assume that the balanced-budget nule holds in that each worker receives half of teamoutput as their wage. What are the efforts that each workers put in?Oel-3, e2-3)O None of the other answers are correct.O el 2, e2-1O el-1,e2-1O e1-4, 2-2

We have to take optimal effort for each worker

Consider a workplace that has two workers who can work as a team. Each worker can put in effort worker 1's effort is labelled et and worker 7's an e2. These effort c simultaneously. Output of the team is Bel+ 4e2. Each worker bears the cost of their effort and has a unity of Us e, where i 1.2 and v assume that the effort of each worker is unobservable but team output can be contracted on. In fact, assume that the balanced-budget rule holde output as their wage. What are the efforts that each workers put in? O e1"-3,2-3 O None of the other answers are correct. O e1-2. e2"-1 O e1-1,e2"-1 O e1"-4, e2"-2

Consider a workplace that has two workers who can work as a team. Each worker can put in effort worker 1's effort is labelled et and worker 7's an e2. These effort c simultaneously. Output of the team is Bel+ 4e2. Each worker bears the cost of their effort and has a unity of Us e, where i 1.2 and v assume that the effort of each worker is unobservable but team output can be contracted on. In fact, assume that the balanced-budget rule holde output as their wage. What are the efforts that each workers put in? O e1"-3,2-3 O None of the other answers are correct. O e1-2. e2"-1 O e1-1,e2"-1 O e1"-4, e2"-2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a world composed of two countries, Home (H) and Foreign (F). Individuals living in each countryi = H, F have preferences over two goods x and y.In each country there is only one factor of production, labour, which is perfectly mobile between industries butimmobile between countries. The total labour endowment at Home is LH = 10 and the total labour endowmentin Foreign is LF = 10.The marginal product of labour in each industry is constant. At Home, one worker can produce 2 units ofgood x or 1 unit of good y per unit of time; at Foreign one worker can produce 1 unit of good x or 2 units of goody per unit of time.Assume that consumers in Home and Foreign always consume goods x and y in the same quantity regardlessof their prices. That is, Cxi = Cyi, i = H, F F. Suppose that the equilibrium price of good x (keeping the price of good y as 1) is equal to 1. Determine the optimal production and consumption both at Home and Foreign when they open up to trade. Depict this in graph.
Consider a world composed of two countries, Home (H) and Foreign (F). Individuals living in each countryi = H, F have preferences over two goods x and y.In each country there is only one factor of production, labour, which is perfectly mobile between industries butimmobile between countries. The total labour endowment at Home is LH 10 and the total labour endowmentin Foreign is LF = 10.The marginal product of labour in each industry is constant. At Home, one worker can produce 2 units ofgood x or 1 unit of good y per unit of time; at Foreign one worker can produce 1 unit of good x or 2 units of goody per unit of time.Assume that consumers in Home and Foreign always consume goods x and y in the same quantity regardlessof their prices. That is, Cxi = Cyi, i = H, F.(a) Calculate the opportunity cost of producing one additional unit of good x in terms of units of good y in Homeand Foreign.(b) Derive the production possibilities frontier (PPF) for Home and Foreign and plot it in a graph…
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