Suppose the production function is given by f(K_A,L_A) = B[K_A)^a[LA}^1-a with a 1/3. Further, let w_A = 0.2, K_A = 343 and L_A = 1000 and B=1 and P_A=$1. What is the agricultural surplus? =
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- The market for gravel has the following demand and supply relationships: Supply function: Q = 100P - 1,000 Inverse demand function: P = 50 - 0.01*Q + PX, where P represents price of gravel per ton in dollars, Q represents sales of gravel per week in tons, and PX is the price of some other product X in dollars per unit. Let PX = $50/ton In a diagram, qualitatively describe the change that would occur in the market for gravel (i.e. equilibrium price and quantity) if a new discovery has just made the production of product X cheaper. Briefly explain whether it is a movement along or shift of demand curve and supply curve for gravel. In addition to the new discovery regarding product X in previous question), suppose now workers producing gravel ask for sick leave due to COVID. Use supply and demand analysis to predict how these two shocks will affect equilibrium price and sales. Illustrate your results in a diagram. Is there enough information to determine if market prices will rise or…2. Suppose a production function is q = K¹211/3 and in the short run capital (K) is fixed at 100. If the wage is $10 and the rental rate on capital is $20, the short run production function is a. q = 10/¹/3 b. g=1002¹/3 C. 1 q= = -11/3 10 d. g = 100Given the production function, Y = AK "L(¹-a) assume that a = 1/3. The labor supply equation is LS = 60*w - R In TABLE ONE, each column represents a labor market in medium-run equilibrium. In column two, an increase in on-the-job-search (OJS) has shifted labor supply to the right. In column three, workers' awareness of higher productivity has shifted labor supply back to the left. 1. Complete TABLE ONE. [Round w to two decimal places.] W = 2/3Y L TABLE ONE Y A K L W R (u) 1 (a) (b) 6000 398 8.23 (c) 21 2 5444 (d) 6000 (e) 8.54 70 (u) = Bw-L-R 3 5.3 6000 415 (h) 75 (1)
- Economic rent is a surplus payment when viewed by the economy as a whole but a cost of production from the standpoint of individual firms and industries. as the price of land increases, there is an incentive to provide more of the resource. land rents are necessary to the economy to ensure that the land is available for economic use. the supply of land responds to changes in rent, but in order to use the land profitably, revenue must cover the rental payments. the supply of land does not respond to changes in rent, but in order to use the land profitably, revenue must cover the rental payments.the production fuction shows the volume of output that can produced from given inputs true falseFind the cost minimizing amount of L for a producer to use when faced with the following production function, production goal, wage, and rent: q = L3K1; q = 1200; w = $58; r = $140 Find the cost minimizing amount of K for a producer to use when faced with the following production function, production goal, wage, and rent: q = L2K3; q = 243; w = $20; r = $30
- Suppose a bout of severe weather drives up agricultural costs, increases the costs of transporting goods and services, and increases the costs of producing goods and services in this economy. Use the graph to help you answer the questions about the short-run and long-run effects of the increase in production costs that follow. (Note: You will not be graded on any adjustments made to the graph.) Hint: For simplicity, ignore any possible impact of the severe weather on the natural level of output. PRICE LEVEL 130 125 120 115 110 105 100 95 90 + 90 95 LRAS AS AD 100 105 110 115 120 125 130 OUTPUT (Billions of dollars) AD AS LRAS (?) The short-run economic outcome resulting from the increase in production costs is known as Now suppose that the government decides not to take any action in response to the short-run economic impact of the severe weather. In the long-run, when the government does nothing, the output in the economy will be $ billion billion and the price level will beAn economy can produce leather using labor and capital and wheat using labor and land. The total supply of labor is 50 units. Given the supply of capital, the outputs of the two goods depend on labor input as follows: Labor Input to Leatheroutput of LeatherLabor Input of WheatOutput of Wheat 27 5 19.8 10 38.5 10 31.2 15 47.3 15 42.3 20 56 20 52.1 25 65.7 25 60.6 30 74.5 30 69 35 82.4 35 77.4 40 88.2 40 85.4 45 94.1 45 93.9 50 100 50 100 a. Graph the production functions for leather and wheat. b. Graph the production possibility frontier. What will happen if more labor is employed?Suppose that a certain product has the following demand and supply functions. Demand: Supply: p = -0.049 + 45 0.049 + 20 p = A $5 tax per item is levied. Determine the supply function when tax is added. p = Find the market equilibrium point after the tax. C (q, p) = =
- 0.50.2 Given the production function q = f(x1, x2) = 1.32 × xx2, input price vector (w1, w2) and output price P, what are correct about the input demands x(w1, w2, p), x (w1, w2, p) ? Numerical results are rounded to the nearest 3-digit. Select one or more: Select one or more: O x (8, 5, 17) = 3.336 and x (8, 5, 17) = 2.202 O x(4, 7, 12) = 4.398 and x (4, 7, 12) = 0.833 O x (8, 5, 16) = 1.874 and x(8, 5, 16) = 1.199 O x (5, 7, 12) = 2.01 and x (5, 7, 12) = 0.982Let y = f(x1, x2)=x11/2 + x1x2 be a firm’s production function, where x1≥0, x2≥0. Write down the firm’s production possibility set, and its input requirement set. Is this production function concave, quasi-concave? Is this production function homogenous? Find its returns to scale when x1=1, and x2=1.Consider the following production function with inputs L and K: Q = (L 0.5 + K0.5)2. The input prices are r = 2 and w = 1. 1) Consider a technological advacement that promotes the productivity of capital such that Q = (L 0.5 + (2K)0.5)2, while w = r = 1. What is the optimal level of K and L?