Consider an economy in which the marginal product of labor, MPN, is:MPN 500 -2N, where N is the amount of labor used.he amount of labor supplied, NS, is given by:NS = 18 + 10w + 3T, where w is the real wage, and Tis a lump-sum tax levied on individuals.Suppose that T= 41.The equilibrium value of employment is(round your answer to two decimal places).The equilibrium value of the real wage is (round your answer to two decimal places).Suppose in this situation, the government passes minimum-wage legislation that requires firms to pay a real wage greater than or equal to $10Which of the following best explains the effect on the labor market?O A. The increase in the wage rate will cause the supply of labor to increase, and thus employment will increase.O B. The minimum wage is below the equilibrium wage, so there is no effect on the labor market.C. The wage rises to $10.88, the quantity of labor demanded increases, and employment increases.O D. The wage will rise to more than $10.88 due to the resulting shortage of labor, and thus there will be no unemployment.O E. The wage rises to $10.88, the quantity of labor demanded decreases, and there is now unemployment.

The equilbrium of the labor market is determined by the forces of demand and supply. The equilbrium…

Answered: onsider an economy in which the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If a labour market is in equilibrium and contracts are incomplete: Employers are willing to hire any unemployed workers willing to work at reservation wages. Select one: O True False
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Consider an economy with production function given by Y = AK0:5L0:5 where A is the total factorproductivity (TFP), K is the capital stock and L is the labor input. For simplicity assume capital is xed and equal to 1. Assume A=100.a. Write the rm's problem of choosing labor demand. Derive the demand for labor as a functionof the real wage.b. Assume labor supply is inelastic and xed at L= 100. Find the equilibrium values of the wageand the employment level for this economy. Display graphically the labor supply and the labordemand curves. Carefully label your graph.c. Suppose the economy faces a positive productivity shock and TFP is now A=200. Displaygraphically the new labor demand function. What are the equilibrium values of employment andthe real wage?d. Compute the total output when A=100 and when A=200. What is the output's growth rate?Compare that growth rate with the growth rate in A. How does the growth rate of output percapita compares to the growth rate in A? Explain…
Question1 Imagine you work for a firm that only utilizes labor and capital as inputs and has a CES production function: q = f(L, K) = [aLº + BK²] = Where a = 3 = 0.5.y 1.p = 0.5. a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this CES function have constant, increasing, or decreasing returns to scale?
7. In Australia the (w) is 10 Australian dollars (AUD) per worker per hour, and the rental price of capital (r) is 2 AUD per machine per hour. Then the wage in units of machines-defined as the amount of machines that could be bought with one hour's wage-is calculated a. by the formula w xr and is equal to 20 machines b. by the formula w/r and is equal to 5 machines c. by the formula w +r and is equal to 12 machines d. by the formula w -r and is equal to 8 machines
In a country called Uncle Sam Land (USL), the labor demand curve is given by:W = K- 4LWhere W is the wage rate, K is a variabledetermined by accumulated capital stock in thecountry, and L is the labor force in the country.K= 50 is supplied by the capitalists.If the labor force in this country goes up from 10 to 11, what happens to the national income in USL?National Income = income of all workers + income of all capitalists.Select one:a. Does not changeb. Goes down by 44c. Goes up by 8d. Goes up by 26e. None of the above.
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Suppose a firm’s technology requires it to hire 100 workers regardless of the wage level. The firm, however, has found that worker productivity is greatly affected by its wage. The historical relationship between the wage level and the firm’s output is given byWage Rate Units of Output$ 8.00 65$10.00 80$11.25 90$12.00 97$12.50 102What wage level should a profit-maximizing firm choose? What happens to the efficiency wage if there is an increase in the demand for the firm’s output?
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