Factor market does Mr.T operates.

Question

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Answer 1

Question

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

(b)

To determine

The price of capital equipment.

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

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Answer

M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

(b)

To determine

The price of capital equipment.

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

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Answer 3

Question

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

(b)

To determine

The price of capital equipment.

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

(b)

To determine

The price of capital equipment.

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

(b)

To determine

The price of capital equipment.

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

Answer 6

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

Answer 7

Chapter 18, Problem 1SPA

(a)

To determine

Factor market does Mr.T operates.

Answer 8

(a)

Expert Solution

Explanation of Solution

Mr. T operates in both labor market and capital market. Mr. T’s decision to hire two new workers at $10 an hour shows the labor market operation. At the same time, his decision to purchase computer at $900 and leasing a computer at $450 shows the capital market operation.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Labor market: Labor market is the market for demand and supply of labor.

Capital market: Capital market is a market where short-term and long-term securities are bought and sold.

Answer 13

(b)

To determine

The price of capital equipment.

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.

Answer 14

(b)

To determine

The price of capital equipment.

Answer 15

(b)

Expert Solution

Explanation of Solution

Computer is considered as capital and the interest rate is equal to the rental price of the capital. Thus, the price of the capital is $900 and the rented rate of capital is $450.