
(a)
Derive the equation that describes labor
(a)

Explanation of Solution
Given information:
Production function is
Calculation:
The quantity of labor that a profit-maximizing firm hires at given wage rate determines the demand for labor. The firm will hire the labor until the real wage rate is equal to the marginal product of labor (MPL). Symbolically, it is represented below:
To derive MPL, differentiate the total output for labor.
Marginal product of labor is
Equate the real wage to marginal product of labor.
Solving demand for labor, the equation can be written as follows:
This equation states that the labor demand is a function of real wage rate and capital stock. An increase in real wage reduces the labor demand.
Marginal product of labor (MPL): The marginal product of labor is the additional output attained by employing an extra unit of labor.
(b)
Real wage rate, total output, and amount earned by worker.
(b)

Explanation of Solution
Given information:
Capital stock is 27,000 units.
Labor force is 1,000 workers.
Calculation:
To solve for real wage rate
Substitute the respective values in Equation (2).
In the equilibrium situation, the profit-maximizing firm will hire 1,000 laborers at real wage rate of 10 units of output.
To calculate the total output, substitute the respective values in Equation (1).
Total output is 15,000 units.
(c)
Real wage rate, output, and demand for labor.
(c)

Explanation of Solution
Given information:
Minimum wage rate is increased to 10%.
Calculation:
The new real wage rate is 11
The profit-maximizing firm hires 751.3 workers at 11 wage rates.
To calculate the new total output, substitute the respective values in Equation (1).
Total output is 12,397 units.
(d)
Explain whether the goal of congress will succeed or not.
(d)

Explanation of Solution
Among 1000 labor forces, 751.3 laborers earn one more unit of output, but at the same time, 24.7 laborers also experienced involuntary
(e)
Explain whether this analysis is a good way to think about the minimum wage law.
(e)

Explanation of Solution
As per this analysis, introduction of this law increased the wage rate but also lead to structural unemployment.
Want to see more full solutions like this?
- Not use ai please letarrow_forwardConsider the market for sweaters in a Hamilton neighbourhood shown in the figure to the right. The consumer surplus generated by consuming the 29th sweater is OA. $67.90. OB. $58.20. ○ C. $77.60. OD. $38.80. ○ E. $19.50. Price ($) 97 68.0 48.5 29.0 29.0 Sweater Market 48.5 Quantity (Sweaters per week)arrow_forwardNot use ai pleasearrow_forward
- In the following table, complete the third column by determining the quantity sold in each country at a price of $18 per toy train. Next, complete the fourth column by calculating the total profit and the profit from each country under a single price. Price Single Price Quantity Sold Price Discrimination Country (Dollars per toy train) (Millions of toy trains) Profit (Millions of dollars) Price (Dollars per toy train) Quantity Sold (Millions of toy trains) Profit (Millions of dollars) France 18 Russia 18 Total N/A N/A N/A N/A Suppose that as a profit-maximizing firm, Le Jouet decides to price discriminate by charging a different price in each market, while its marginal cost of production remains $8 per toy. Complete the last three columns in the previous table by determining the profit-maximizing price, the quantity sold at that price, the profit in each country, and total profit if Le Jouet price discriminates. Le Jouet charges a lower price in the market with a relatively elastic…arrow_forwardNot use ai pleasearrow_forwardNot dhdjdjdjduudnxnxjfjfi feverarrow_forward
- Discuss the different types of resources (natural, human, capital) and how they are allocated in an economy. Identify which resources are scarce and which are abundant, and explain the implications of this scarcity or abundance.arrow_forwardNot use ai pleasearrow_forwardNot use ai please letarrow_forward
- Location should be in GWAGWALADA Abuja Nigeria Use the Internet to do itarrow_forwardUsing data from 1988 for houses sold in Andover, Massachusetts, from Kiel and McClain (1995), the following equation relates housing price (price) to the distance from a recently built garbage incinerator (dist): = log(price) 9.40 + 0.312 log(dist) n = 135, R2 = 0.162. Interpretation of the slope coefficient? ► How would our interpretation of the slope coefficient change if distance were measured in metres instead of kilometres?arrow_forwardIf GDP goes up by 1% and the investment component of GDPgoes up by more than 1%, how is the investment share ofGDP changing in absolute terms?▶ In economics, what else is expressed as relative percentagechanges?arrow_forward
- Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning




